Ryanair profits surge, but O’Leary warns of tough times ahead
Ryanair has achieved a 25% increase in full-year profits.
Announcing its full-year results today, the budget airline reported net profits of €503 million (£406m) in the 12 months to 31 March 2012, up from €401m the previous year. The company’s revenues jumped 19% to €4.33 billion.
Despite the positive results, the airline warned that the coming months are likely to be more difficult, with softening demand and rising jet fuel prices expected to hit home.
“Our fuel bill will rise by €320m in FY13 (the financial year ending 31 March 2013) with most of this increase skewed into H1, and as a result we expect to report a Q1 profit fall due to these higher prices. We remain concerned about next winter as we have zero yield visibility but expect recession, austerity, currency concerns and lower fares at new and growing bases in Hungary, Poland, provincial UK, and Spain will make it difficult to repeat this year’s record results,” the airline’s chief executive Michael O’Leary said in a statement.
“We expect that any increase in fares will only partially offset higher fuel costs, and accordingly we are guiding net profit in FY13 subject to final yield outturn will be lower than FY12 in a range of between €400m to €440m,” he added.
Commenting on the recent demise of several European airlines, including Spanair and Malev, O’Leary said he expects “more European failures in 2012, as higher oil prices and recession continues to expose failed airline models”.
Ryanair grounded dozens of aircraft last winter, which helped to cut the airline’s costs and raise fares, and O’Leary said it may undertake a similar strategy in 2012-13.
“Higher oil prices next winter and the refusal of some monopoly airports (most notably Dublin and Stansted) to lower winter charges makes it more logical to ground up to 80 aircraft rather than suffer losses flying at very low winter yields in FY13,” he said.
In the 12 months to 31 March 2012 Ryanair carried a total of 72.1m passengers, making it the world’s eighth largest airline in terms of passenger traffic, ahead of British Airways.