Ryanair to ground a third of fleet despite bumper profits
Ryanair saw profits jump 26% to €401m(£348m) for the full year to the end of March following an 8% rise in traffic, a 12% increase in average fares and a 21% increase in ancillary sales to €802m (£696m).
The budget airline enjoyed a 21% increase in revenue to €3,630m (£3,150m)despite disruption caused by the volcanic ash crisis, higher oil prices and the global recession.
However, the low-cost airline announced it would ground more than a third of its fleet next winter as rising fuel costs mean it will be cheaper than keeping them flying.
Although the airline has ‘hedged’ 90% of its fuel at prices significantly below the current level, the $82 per barrel it has agreed to pay is 12% higher than a year ago.
"Higher oil prices next winter, and the refusal of some airports to offer lower charges, makes it more profitable to tactically ground up to 80 aircraft (compared with 40 last winter) rather than suffer losses operating them to high cost airports at low winter yields," it said in a statement.
The decision is expected to lead to a 4% drop in passenger numbers in the second half of the year following a 10% increase in the first half.
Ryanair said: "Since we have limited visibility on bookings, we remain concerned at the impact of the recession, austerity measures, and falling consumer confidence on fares.
"Despite these concerns we cautiously expect that our average fares will rise by up to 12% this year due to a better mix of new routes and bases, slower traffic growth, and higher competitor fuel surcharges.
"However, these higher fares will only help us to finance higher fuel and rising sector length related costs, and accordingly, we expect profit after tax for FY12 to be similar to the FY11 result of €400m."
The airline said that 22% of its revenue now comes from the sale of ancillary services, such as checked in baggage and inflight purchases, with growth in this areas far outstripping the rise in traffic.
By Linsey McNeill
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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