28 July 2008

Ryanair's profits plunge

Ryanair has warned that it might make a loss this year as spiralling oil prices take their toll. The budget airline saw profits during the first quarter fall 85% to â'š~¬21m (ã16.6m) and chief executive Michael Oââ¬â¢Leary said at best Ryanair would only break even this year.

The companyââ¬â¢s fuel bill rose 93% to â'š~¬367m (ã290m) in the first quarter, representing almost 50% of its operating costs, compared with 36% a year ago.

In spite of the increased fuel costs, Oââ¬â¢Leary said Ryanairââ¬â¢s fares would remain low and it remained committed to its no fuel surcharge policy.

ââ¬ÅâœConsumer confidence is plummeting, and we believe this will have an adverse impact on fares for the rest of the year,ââ¬~ he said .ââ¬ÅâœWe now believe that our average fares for the year may fall by as much as 5% if European airfares plunge this winter.

ââ¬ÅâœRyanair will lead this downward pricing at a time when most of our competitors are hoping to raise fares and fuel surcharges.ââ¬~

The airline saw a 25% growth in ancillary sales during the first quarter, compared with a 19% increase in traffic, and Oââ¬â¢Leary said he expects this growth to continue for the rest of the year.

Charges for mobile phone usage on flights will soon provide an additional revenue stream for the airline. Passengers will shortly be able to use their mobile phones and Blackberryââ¬â¢s on 10 Dublin based aircraft in a trial which will expand to almost 40 aircraft by the end of the year.

Ryanair took advantage of a recent dip in oil prices to hedge 90% of its fuel for September at $129 a barrel and 80% for the third quarter at $124 a barrel, but it has not fixed the price for any of its fuel requirements for the fourth quarter.

Its forecast end of year result of between breakeven and a â'š~¬60m loss is based on a fourth quarter fuel price of $130 a barrel.

By Linsey McNeill

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• Wow
  
  

  I loved it when Mr O'leary called us parasites.... Look at what he looks like !! I only hope that I can watch his face when the administrators are called in ... I think we are all waiting in the Travel Industry Mr O'Leary ... Remember that famous song "there maybe trouble ahead". Im down the bookies

  By paul smith, Monday, August 4, 2008
• its all about yield management
  
  

  Obviously Mr O'leary has his yield management calculations way off. He already knew things would get tough as he predicted correctly at the beginning of the year bit this strategy he has of lowering prices even further will certainly make or break Ryanair. Will they survive long enough on past revenue to survive cost cutting in the midst of escalating prices just to force rivals outof business? who knows. But one thing is clear and this in my opinion is his greatest ever failing; Ryanair shunned the trade and called them parasites, whilst rival airlines embrace the trade and work with them. The arithmetic is simple; morepax per craft = greater yield per flight. Ryanair by excluding trade business has eliminated huge additional passenger revenue and taken a hit on yield. right now, William Hill will be giving "evens" as to the potential for Ryanair to see 2010. The "smart money" is staying in the pockects of the travel industry

  By Kenny Picken, Wednesday, July 30, 2008
• Oh Dear!
  
  

  Dear, oh Dear,Oh Dear. Could mr O'Leary and his comments about "Crappy" Airlines also be referring to his own?

  By Matt Sanders, Tuesday, July 29, 2008