Ryanair says fuel prices will drive down profits
BUDGET airline Ryanair yesterday announced record profits of €503m (£406m) for the year to March 2012, an increase of a quarter on a like-for-like basis.
But the Dublin-based firm said that this would be the last year of expectation-beating profit rises and warned that returns could drop by as much as 20 per cent during the next fiscal year.
“Recession, austerity, currency concerns and lower fares at new and growing bases will make it difficult to repeat this year’s record results,” said chief executive Michael O’Leary.
“If we were guiding a blue sky scenario with rising fares into next winter, we would be nuts,” he said.
Ryanair has focussed on increasing fares – up 16 per cent this year – in order to offset substantial hikes in taxes and oil prices.
The tactic has paid off, with revenue up 19 per cent at €4,325m, helping to negate a €360m increase in fuel costs.
Chief financial officer Howard Millar said that traffic will grow by five per cent to reach 79m in the year to March 2013 but explained that substantial fare increases are no longer possible.
Asked about the effects of the Greek economic crisis, he commented: “Greece is very small for us. We would be more concerned about places like Spain, its high unemployment and plans to raise taxes.”
The airline also confirmed it would hand €483m to shareholders in just its second dividend payout since floating in 1997.
Despite aiming to slow its previously rapid expansion Ryanair has recently expanded into Hungary, Spain and Scandanavia to take over from defunct local operators.
The additional bases led them to purchase 25 new aircraft and open 330 new routes, taking the total number of Ryanair routes to over 1,500.
Peter Hyde, an analyst at Liberum Capital, reaffirmed his buy rating: “We expect Ryanair to focus on delivering growth in net income per passenger and to benefit from capacity discipline, slowing its own growth, closing the fare gap and weak competitors exiting the market.”
Shares in the firm were down 2.5 per cent.