Ryanair cautions over ‘difficult’ winter ahead

Friday, 02 Aug, 2006 0

Ryanair has warned of a “very difficult” winter trading period despite producing record first quarter results.

CEO Michael O’Leary revealed “bumper” net profits up by 80% to 115.7 million euros (£79 million) in the three months ending June 30, with passenger numbers increasing by 25% to 10.7 million.

Ancillery revenues grew by 31%, a growth in sales which outpaced scheduled traffic.

“As we stimulate further traffic growth with lower fares, we find that passengers are more willing to spend some of their savings on additional products and services such as car hire, hotels and travel insurance,” said O’Leary.

But he added that substantial winter capacity expansion, higher than expected oil prices and “price dumping by loss making competitors” will mean a very difficult winter.

“We may even sustain losses during the fourth quarter this year,” he added, noting that the airline was still on course for a 5%-10% increase in profits by the end of the fiscal year.

Ryanair said aviation fuel prices now stood at $74 per barrel against its original forecast of $70 and fuel costs in the last quarter rose by 52% to 167.5 million euros. O’Leary described fuel prices as continuing to be “high and volatile”.

The airline is 70% hedged with fuel at $70 a barrel until the end of October and 90% hedged at $74 a barrel for November and December but is unhedged for the January-March, 2007 quarter.

The airline’s fleet is to expand with the addition of 27 aircraft over the winter, resulting in new routes and bases.

O’Leary welcomed the takeover of airports operator BAA and said the airline would continue to strongly campaign for the break-up of the “BAA airport monopoly”.

Report by Phil Davies

Phil Davies

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