03 February 2009

Ryanair plunges into the red as fuel costs soar

LONDON - Ryanair has been hit with a third quarter loss of Ã¢'š~¬102 million, compared to a profit of Ã¢'š~¬35 million in the same period a year earlier.

Average fares fell by 9% to Ã¢'š~¬34, while fuel costs rose by 71% to Ã¢'š~¬328 million.

Revenues in the three months to the end of December rose by 6% to Ã¢'š~¬604.5 million, as traffic grew 13% to 14 million passengers.

Ancillary revenues rose by 19% to Ã¢'š~¬132 million, and now account for 22% of revenues Ã¢â¬' up from 19% a year earlier.

The budget carrier expects to make a profit at the year end due to falling fuel costs.

CEO Michael OÃ¢â¬â¢Leary said: Ã¢â¬ÅâœOur Q3 loss of Ã¢'š~¬102 million was disappointing, but in line with expectations, and was almost entirely due to a Ã¢'š~¬136 million increase in fuel costs.

"Average fares, due to recession and weaker sterling, fell by 9% to Ã¢'š~¬34, but this decline was largely funded by a 3% reduction in non fuel operating costs.Ã¢â¬~

He added: Ã¢â¬ÅâœThe general economic environment remains extremely difficult, as the recession saps consumer confidence, but this is proving to be good for RyanairÃ¢â¬â¢s traffic growth, as more and more passengers switch to RyanairÃ¢â¬â¢s lowest fare lowest cost model.

Ã¢â¬ÅâœMany of our competitors have in recent months reported short-haul traffic falls, while Ryanair continues to grow. We will continue to lower fares to maintain our traffic growth and high load factors.Ã¢â¬~

OÃ¢â¬â¢Leary revealed that it is to start a six month trail of the use of on board mobile phones at the end of the month on 20 Dublin-based aircraft. This should be extended to some 40 aircraft by the end of the summer.

Ã¢â¬ÅâœWe expect initial revenues to be small, but believe that in-flight communication will be a strong source of ancillary revenue growth in future years,Ã¢â¬~ he added.

by Phil Davies