News Column

Ryanair Profits From Passenger Growth in Austere Times

Nov. 5, 2012

Tight traveller budgets at times of recession are behind Ryanair's 10-percent increase in net profit to 596 million euros ($765 million) in the six months to September, propelled by a record rise in passenger numbers, the airline said Monday.

Ryanair was "benefiting from austerity across Europe" as it managed to keep prices down, said chief executive Michael O'Leary at a presentation of half-yearly results in London.

"The price gap between us and the competition is getting bigger. People are coming to Ryanair for the price and they are coming back again and again for our new aircraft and the punctuality of our flights," said O'Leary.

He predicted that Ryanair would continue to benefit from a consolidation in the industry and from "the effect of the recession on loss-making carriers around Europe which are now cutting back."

The airline said that the "robust" result was because of a combination of strong bookings and lower fuel costs. Ryanair, which raised prices by an average 6 per cent, said overall fuel costs rose by 24 per cent to 218 million euros during the period.

O'Leary's upbeat assessment came after the Dublin-based airline said profits had risen by 10 per cent between April and September, compared with 544 million euros for the same period in 2011.

Passenger numbers rose by an average 6 per cent, from 44.7 million to 48 million, as revenue increased by 15 per cent to 3.1 billion euros.

The airline raised its profit forecast for the full year to 490-520 million euros, from earlier estimates of 400-440 million euros.

O'Leary said reports about alleged safety concerns at Ryanair - relating mainly to allegations that the aircraft were carrying minimum levels of fuel - had been exaggerated, and the issue had been settled.

Ryanair had been assured by the relevant authorities that it complied fully with European Union safety procedures.

Under its 10-year strategy, Ryanair planned to acquire 200 new aircraft, while hoping to increase passenger numbers from currently 80 million a year to 120 million over the next five to 10 years.

It was important for Ryanair to break into markets in Europe where competition was still lacking, said O'Leary. Prices for short-haul flights had come down dramatically in Europe because of the "choice provided by Ryanair."

"Further airline failures and consolidation are inevitable," he said.

The carrier, which operates more than 1,500 flights a day across 28 countries, recently said it would add nine new routes to three regional airports in Britain, creating 1,000 jobs. Potential for growth would come mainly from central and eastern Europe.

However, the airline expected traffic to be "broadly flat" over the current six-month period. Ryanair would ground up to 80 aircraft over the winter as a result of high oil prices, airport fares and seasonally weaker demand.

It said it expected "market conditions in Europe to remain tough as recession, austerity, high fuel costs and excessive government taxes dampen air travel demand."

O'Leary said he was determined to pursue Ryanair's bid to take over Irish airline Aer Lingus, in which it already holds 30 per cent. He was confident that the European Commission would vote in favour of the bid.

Source: Copyright 2012 dpa Deutsche Presse-Agentur GmbH

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