Ryanair profits plunge due to higher fuel costs

Ryanair blamed a 22% increase in the cost of its fuel for a €40m fall in profits during the first quarter of the year.

However, the airline said it still planned to expand further this year and revealed it will announce two new bases and additional routes within the next few weeks.

Traffic in the three months to the end of June was up 6% and average fares rose 4%, leading to an 11% rise in revenues, but profits fell 29% to €99m due to the rise in oil prices.

Ancillary sales outpaced traffic growth, rising by 15% to €286m, and now account for 22% of the airline's total revenues.

Yield increases were dampened by the EU-wide recession, austerity measures, and heavily discounted fares at the airline's UK regional airports as well as at new bases in Cyprus, Denmark, Hungary, Poland and Spain.

Ryanair said new bases in Billund, Budapest, Manchester, Palma, Paphos and Wroclaw were enjoying high load factors, but fares from Hungary and Poland were very low.

The airline said its outlook remained "cautious". It expects traffic for the full year to grow 4% to 7% in the first half and 1% in the winter due to capacity cuts, and smaller increases in fuel costs in the second quarter. Anticipated profit for the full year remains unchanged at €400m to €440m.

By Linsey McNeill

Monday, July 30, 2012