More turbulence for Ryanair as losses hit €35m

The airline says its unimpressive third-quarter figures are to do with a fall in fares. Investors are sympathetic.

by Emma Haslett
Last Updated: 27 Feb 2014

It seems Ryanair boss Michael O’Leary is making good on his promise to take a step back: the airline put in an uncharacteristically sober performance on this morning’s Today programme when it sent deputy chief executive Michael Cawley, rather than O’Leary, to explain why it made a €35m (£28.7m) loss in its third quarter.

Cawley said the loss was down to a 9% fall in the average fare - although in a trading statement this morning, O’Leary pointed out that passenger numbers had risen by 6%. O’Leary kept his commentary to a minimum, blaming seat promotions.

‘Our Q3 loss of €35m is in line with previous guidance,’ he said.

There was some good news: ‘ancillary’ revenues - reserved seating, speedy boarding and those pesky credit card fees - rose by 13%, while bookings during the fourth quarter increased ‘significantly’, which O’Leary reckons is to do with Ryanair’s new, cuddly image.

‘It now appears that sales of reserved/allocated seats will exceed the revenue loss from cutting airport and bag fees,’ he said. ‘This should enable Ryanair to deliver strong growth in revenues in financial year 15.’

It seemed to be enough for investors: the airline's share price rose by nearly 4% in early trading. Nevertheless, they'll be keeping one eye on rival Easyjet, which reported a 51% rise in full year pre-tax profits in November.

O’Leary said Ryanairs reforms - which include allocated seating, one ‘small’ extra carry-on bag and lower check-in and bag fees - will ‘deliver stronger forward bookings’.

It’s less theatrical, though, isn’t it?

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