Ryanair profits soar in Q3

The price of oil may have hit $111 a barrel but Ryanair is still keeping margins at 19%. By introducing a raft of fare hikes on popular routes, the airline trousered €15m after tax in the third quarter.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
Ryanair is officially back on form. After it posted a €10m loss back in Q3 of 2010, the airline has been steadily clawing back profit. Today, it posted a €15m windfall in the three months to December 31.

CEO Michael O’Leary explains the secret to Ryanair’s success: ‘The EU recession, higher oil prices, the unfolding failure of the package tour operator model, significant competitor fare increases and capacity cuts, has [sic] created enormous growth opportunities for Ryanair, as large and smaller airports across Europe compete aggressively to win Ryanair’s growth,’ he says.

The ‘world’s favourite airline’ has just adjusted its full-year earnings forecast off the back of these results to €480m, up 9% on the previous estimate. However, this pot of gold wasn’t found at the end of the rainbow, Ryanair has been introducing a serious of fare increases that means travellers are now paying 17% more for their flights than they were in 2010. Not to mention all those extra charges for checking in bags, priority boarding... Even a glass of water will set you back a couple of quid.

Analysts certainly never believed that such results would be possible when they placed their bets at the tail-end of last year. Ryanair was forced to ground 80 of its 270 planes over the winter due to high fuel costs, and passenger numbers were down 2%. Nevertheless, revenue for the quarter hit €844m, that’s a fair bit more than the €819m forecast in a poll of 21 analysts last year. They may be feeling slightly red-faced about their profit balls-up too – they predicted a €16m loss.

Overall, it’s been an incredibly robust few months for the budget airline industry. EasyJet reported revenues of €844m in its quarter to December 31 and its passenger number are up around 8%. Compare that to the lot of German group Lufthansa and Air France-KLM, which have both slashed their profit forecasts.

But as fuel costs soar into 2012, the budget boys may lose their lead. Ryanair reckons that it will spend €350m more on the black stuff this year. ‘So far we have been able to pass on higher fuel charges to passengers in the form of higher fares,’ says Ryanair’s chief financial officer Howard Millar. That doesn't bode well for fans of the cheap getaway.

Indeed, we reckon Ryanair would probably have liked to charge shareholders for copies of today's results, if only it were allowed to...

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