Ryanair saw its half-year profits slump by 47% to €215 million as a result of soaring fuel costs.



The airline’s fuel bill in the six months more than doubled from €392.7 million to €788.5 million. 



Fuel accounted for more than half of total operating costs as the cost per barrel doubled from $63 to $125. 

The Irish airline also confirmed it is working on its first long haul service to the US but not for the next 12 to 18 months.

Chief executive Michael O'Leary said Ryanair would only start transatlantic routes if it could secure cheap long-haul aircraft from rivals.



O’Leary predicted that the budget carrier would rebound as the recession continues to drive down oil prices and fares this winter. 



"We expect continuing bankruptcies and consolidations to create even more opportunities for Ryanair to grow,” he said 



“If oil prices remain at approximately $80 per barrel next year then our earnings will rebound strongly. 



“We have a significant cost advantage over our competitors many of whom have hedged fuel next year at significantly higher levels than current market prices. 



“This will force competitors to further increase air fares and widen the price gap between them and Ryanair's lowest fares. 



“With one of the strongest balance sheets in the airline industry, €2.1 billion in cash and the lowest cost base, Ryanair is strongly positioned to take advantage of the opportunities that will inevitably arise from the financial crisis and economic recession over the coming year."      



Passenger traffic grew by 19% to 32 million in the six months to September, as average fares (incl. bag charges) fell by 4% to €47.



Total revenues grew by 16% to €1.8 billion. Unit costs excluding fuel fell by 6%, (incl. fuel they rose 21%), despite a 2% increase in average sector length.



Ancillary revenues in the half year grew by 28% to €322 million to account for almost 18% of revenues against 16% last year. 



Looking forward, O’Leary said: “Many more loss making European airlines will go bust this winter because of unsustainable losses and insufficient cash reserves. 



“Airline consolidation will continue as flag carriers merge into three high fare, fuel surcharging groups, led by Air France, BA, and Lufthansa. 



“Ryanair will continue to compete with these high fare mega carriers most of whom stubbornly refuse to reduce their fuel surcharges to reflect the recent 50% fall in oil prices.”  



He added: “Although we have limited visibility, we now believe that average fares in the second half will fall by between -15% to -20% leading to losses in the third and fourth quarters. 



“Our full year average fare could fall by almost -12% although these lower fares will be largely offset by lower fuel costs (currently $73 pbl in Q4). 



“As a result our previous guidance remains unchanged and we remain confident that we will break even for the full year.” 



by Phil Davies