Ryanair Profits Stall

Although budget airline Ryanair is still expected to break even over the full year, as lower fares would be largely offset by the recent reversal in fuel costs, the company is likely to be loss-making over the next six months.

This follows forecasts of a drop in average fares of between 15% and 20%.

However, the low-cost airline said falling oil prices and its desire to keep its planes flying with fewer empty seats would drive fares lower.

Ryanair reported half-year profits at the weekend which have fallen 47% to €215 million (£170.4m) in the six months to September 30, a period when fuel costs soared 101%.

But, a statement added: "The recession will continue to drive down oil prices and fares this winter.

"We will continue to respond with lower fares and aggressive price promotions to keep Europe flying and to maintain our market leading load factors."

Top Ryanair executives believe that average fares in the second half will fall by between 15% and 20%, leading to losses in the third and fourth quarters of the year.

However, this can be counterpointed by passenger numbers growing by 19% to 31.6 million in the half-year, with revenues ahead 16% at €1.55 billion (£1.23 billion).

It expects traffic numbers to grow by 9% this winter, despite grounding 15 Stansted aircraft and some four Dublin-based aircraft because of "unjustified" increases in passenger charges.

Chief Executive Michael O'Leary said: "If oil prices remain at approximately 80 dollars a barrel next year then our earnings will rebound strongly. We have a significant cost advantage over our competitors, many of whom have hedged fuel next year at significantly higher levels than current market prices.

"This will force competitors to further increase airfares and widen the price gap between them and Ryanair's lowest fares."

The company has 31 bases and more than 800 routes in 26 countries.

(BMcC)