Ryanair maintains forecast for return to profitability

By Geoff Percival

Tuesday, November 03, 2009

RYANAIR has maintained its forecast of returning to profitability in its current financial year, after recording an 80% year-on-year jump in net profit for its first half.

Pre-tax profit for the six months to the end of September amounted to €432.9 million (up from €224.5m for the corresponding period last year) and net after-tax profit was up from €373.5m to €387m.

There were also healthy year-on-year increases for earnings per share and passenger numbers for the period, with the former up 82% to 26.23c and the latter up 15% at 36.4m.

However, first-half revenue was down 2% at just under €1.77 billion and the airline’s share price was down more than 4% – or 12c – at one stage yesterday, on the back of its outlook that losses are likely in both the third and fourth quarters of its current financial year (on the back of lowered fares), which runs to the end of March.

The shares rallied, however, in later trading to close the day at €2.89, a 6c or 1.9% drop on Friday’s close.

For the current year, the airline expects a full-year net profit of somewhere at the lower end of a €200m to €300m range.

Ryanair made a €169m loss for its last full year, due mainly to the massive write-down in the value of its 29% stake in Aer Lingus.

Ryanair also confirmed yesterday that it has already partially hedged on its fuel needs for its next financial year – 50% of first-quarter needs at a price of $662 per tonne and 50% for the second quarter at $741 per tonne.

It also expects to realise fuel cost savings of around €500m in its current financial year.

Ryanair chief executive Michael O’Leary said that the company is "ideally positioned" to return to substantial profit after the European economy picks up.
He said the company will continue to grow as it further reduces its dependency on Ireland and Britain.

"We have the strongest balance sheet in the European airline industry and we continue to negotiate significant cost reductions with airports and handling companies who are keen to share in our growth, while other customers consolidate or collapse," Mr O’Leary added.

This story appeared in the printed version of the Irish Examiner Tuesday, November 03, 2009