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Ryanair warns of ‘perfect storm’
Ryanair saw net profits drop by 27% to 37 million euros in the final quarter of 2007.
The decline from 48 million euros in the same three months of 2006 came despite a 21% rise in traffic to 12.4 million passengers.
The no-frills carrier said there had been an underlying profit decline of 10% due to a 10 million euro contract penalty from a previous hotel partner received in the final quarter of 2006.
Chief executive Michael O’Leary described the performance as “creditable” in “very adverse” market conditions.
Ancillery revenues rose by £30% year-on-year to 111 million euros, setting the airline on course to achieve 20% of revenues through ancillary sales over the next three years.
Ryanair expects net profit growth of 17.5% to 470 million euros for the full financial year.
“Our ability to grow net profits in a year when most of our competitors are suffering declines or losing money, is a testament to the continuing strength of Ryanair’s guaranteed lowest fare business model across Europe,” O’Leary said.
However, he described the outlook for the coming year as “poor” due to high fuel prices and fear of recession in the UK and other European countries.
O’Leary admitted that there is now a “significant chance” that profits may decline next year as the European airline industry faces a cyclical downturn, with the prospect of a “perfect storm” of higher oil prices, poor consumer demand, weaker sterling and higher airport costs.
by Phil Davies
Phil Davies
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