Ryanair, the airline which is never knowingly backwards in coming forwards, said today that it now expects to make a full-year profit of about €50m-€80m – as opposed to barely breaking even, as per its previous forecast. It’s all down to the falling price of oil: although the legacy of last summer’s record prices landed Ryanair with a loss of more than €100m for the three months to December, the subsequent fall looks like propelling the airline back into the black. So it can even manage to put a positive spin on a six-figure loss...
During the summer months, when oil was heading for $150/ barrel (and some commentators were predicting it would soon break through the $200 mark), Ryanair decided to hedge its bets by ordering some fuel in advance – before the price started plummeting. As a result, its fuel costs during the third quarter were apparently 71% higher than during the same period last year, at €328m. Take off that extra €140m or so, and it would have finished the three months in profit.
But it wasn’t all bad news last quarter. Whereas rivals have seen traffic plummet recently, Ryanair managed to boost passenger numbers by 13% to 14m – so it’s clearly taking some custom of its blue-blooded competitors. And although average fares were down 9% (to €34), this was largely offset by a drop in non-fuel operating costs (employing even fewer staff to look after your bags or point you towards your plane, possibly?), leading to a 6% hike in overall revenues. At a time when the airline industry’s supposed to be in crisis, that’s a pretty impressive result.
What’s more, Ryanair reckons next year should be even better. It’s taken advantage of the current low fuel prices to buy 75% of its Q1 and Q2 fuel, plus 50% of Q3; at this rate, its fuel bill could drop by €500m next year. If it can keep taking passengers off its rivals, and keep increasing ‘ancillary revenues’ (like expensive snacks, Bullseye Baggies, and soon, mobile telephony – yes, we’re afraid so), it could be on course for a stonking 2009. Hence why its share price is up 5% this morning.
Of course, this wouldn’t be a Ryanair results statement if it didn’t include a pop at its rivals (‘high fare fuel surchargers, led by Air France, BA and Lufthansa’), the regulators (the ‘incompetent’ CAA and the ‘hopelessly inadequate’ Irish equivalent), and its least favourite place, Dublin Airport (with its 'third rate, third world services’). As for poor Aer Lingus, which recently rejected Ryanair’s takeover offer: ‘It is doubtful that Ryanair will waste any further management time or resources making another offer for Aer Lingus, as its scale and losses will continue to render it increasingly irrelevant in Europe's airline landscape.’ Ouch. Looks like this year will be more of the same for Ryanair...
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