Ryanair raises fiscal year outlook
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Ryanair announced (02-Feb-09) a Q3 loss of EUR102 million, (compared to a profit of EUR35 million in last year’s Q3). Average fares fell by 9% to EUR34, while fuel costs rose by 71% to EUR328 million. Revenues rose by 6% to EUR604.5 million, as traffic grew 13% to 14 million, as more consumers switch to Ryanair’s low fares from high fare competitors.
Announcing these results Ryanair’s, CEO Michael O’Leary said:
Q.4 and full year outlook
“Our outlook for the fourth quarter has improved somewhat. Our decision not to hedge Q.4 oil prices has been vindicated by their continuing decline and we will benefit from much lower oil costs in Q.4 of approx. $500 per tonne. Some of this cost advantage will be diluted by weaker yields, which are the result of our aggressive price promotions, the decline in Sterling and the impact of the recession which is making consumers much more price sensitive. As a result of this degrading environment we expect Q.4 average fares to fall by 20% at the upper end of our previously guided range. Thanks to lower oil costs and continuing reductions in non oil operating costs, we expect the Q.4 loss will be smaller than previously anticipated, so we are upgrading our full year 2008/09 guidance from break even to a net profit after tax in a range of EUR50 million to EUR80 million (Pre-exceptionals).
“Looking forward into fiscal 2009/10, Ryanair will enjoy significantly lower oil costs thanks to our recent hedging programme, when most of our competitors are already hedged at much higher prices. We intend to use this cost advantage to again lower fares. These lower prices will drive Ryanair’s traffic growth, maintain high load factors (and ancillary sales) and capture market share from higher cost fuel surcharging competitors. We won’t be in a position to give earnings guidance for next year, until the fare environment becomes somewhat clearer. At this time we expect fares to fall next year by over 10%, although if the recession deepens, it could be worse than this. However the 38% reduction in oil prices which our fuel hedging has secured will ensure that Ryanair returns to substantial profitability next year, when many of our competitors will be reporting losses.
“The longer and deeper this recession, the better it will be for the lowest cost producers in every sector. Like Lidl, Aldi, Ikea and McDonalds, Ryanair, is the lowest cost provider – by a distance - in the European airline industry, and we are poised for substantial traffic and profit growth in the coming year as the recession forces millions of passengers to focus on price, while still (in the case of Ryanair) enjoying our superior punctuality, fewer cancellations and younger aircraft fleet.”
(C) Centre for Asia Pacific Aviation. Date posted: 03-Feb-09
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