Ryanair expects profit growth despite recession
Sunday, 01 Feb, 2010
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Ryanair has predicted making further market share gains against tradition flag carriers.
Revealing a reduced third quarter loss of €11 million for the quarter ending December 31, 2009, from a loss of €102 million in the same period the previous year, CEO Michael O’Leary also said he expected further airline failures this winter.
The low fares carrier’s revenues rose by 1% to €612 million in the quarter as 14% traffic growth was largely offset by a 12% decline in average fares.
Ryanair carried 16 million passengers in the three months, up 14% year-on-year, with ancillary sales up by six per cent.
“Our Q3 loss of €11 million is disappointing although better than expected, and a significant improvement on last year’s Q3. These numbers are distorted by a 37% fall in fuel costs which offset a 12% decline in average fares,” said O’Leary.
“Yields fell by 12% which was better than anticipated due to an improved mix of new routes and bases this winter and deep cuts in loss making winter capacity at high cost airports such as Dublin and Stansted.”
He added: “Over the past few months we have witnessed the demise of Blue Wings (GER), Flyglobespan (UK), Sky Europe & Seagle Air (Slovakia), and My Air (Italy) and we expect further casualties this winter.
“We are increasing market share particularly where we compete with the big three high fare flag carrier groups led by Air France, BA and Lufthansa.”
O@Leary described market conditions as remaining “difficult” but added: “The increasing pace of consolidation and closures among our competitors allied to Ryanair’s continuing fleet expansion will lead to further market share gains this year in particular in Italy, Scandinavia, Spain, and the UK.
“Capacity cuts by many of Europe’s flag carriers have led to traffic falls at most European airports.
“This has created opportunities for Ryanair to grow as many airports are vigorously competing against each other to win Ryanair’s growth. This aggressive competition has resulted in our airport and handling costs per passenger falling by 11% (despite increases in Stansted and Dublin) and we will continue to launch more of these new low cost routes and bases in the coming year.”
He said the airline expected a slightly better yield performance to continue into the fourth quarter resulting in a full year yield decline closer to 15% rather than the 20% previously guided.
“As a consequence, we have now increased our full year net profit guidance to €275 million from the lower end of the range of €200 million to €300 million previously guided,” said O’Leary.
“Ryanair remains uniquely positioned to benefit from the accelerating pace of airline consolidation and closures in Europe which has led to significant capacity reductions,” he said.
“We have announced an impressive array of new routes and bases for fiscal 2011 and expect to grow traffic by approx. 10% to 73 million as airports more and more recognise Ryanair’s unique ability to deliver substantial and sustained traffic growth even during a downturn.
“Despite the depth of the current recession, Ryanair will continue to grow traffic and profits (while most other airlines lose money) for the benefit of our passengers, our people, and our shareholders.”
by Phil Davies
Phil Davies
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