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Ryanair maintains full year guidance despite profits fall

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Profits in Ryanair (LON:RYA) took a dive in the April-to-June quarter, as expected, and the company made no change to full-year profit guidance.

The timing of Easter this year meant average fares were 4% lower this time round, while air traffic controllers in France going on strike in June also did not help matters. On top of that, fuel costs rose 6% year-on-year, feeding through to a 4% overall rise in unit costs.

The “everything else costs extra” airline chalked up profit after tax in the quarter of €78mln, down 21% from €99mln the year before, on revenue that rose 5% to €1,342mlon from €1,284mln.

“Ancillary revenues grew by 25% to €357m (27% of total revenues) driven by the successful development of reserved seating, priority boarding, and higher admin\credit card fees,” Ryanair’s outspoken chief executive, Michael O’Leary, revealed.

In what is the first quarter of the company’s financial year, the number of passengers carried rose 3% to 23.2mln from 22.5mln in the corresponding period of 2012.

O’Leary said the airline’s seven new bases are performing well, and the company intends to announce more new routes later this year, while competitors such as Air Berlin, Alitalia, Iberia, LOT and SAS are cutting back their networks.

“We are in ongoing negotiations with MAG, the new owners of Stansted airport, to reverse six years of record traffic declines, but there is no guarantee that any deal will be agreed,” O’Leary said.

This quarter looks set to be a challenging one for the carrier, as it is facing tough comparatives from a year ago, but the company still expects yields to rise, despite some indication that the recent heat wave in Northern Europe has deterred some punters from jetting off to the continent’s hot spots.

“As ever, our outlook remains cautious for the full year as market conditions are tough with recession, austerity, high fuel costs, and excessive Government taxes (most recently in Belgium) impacting air travel demand and yields,” O’Leary said.

“While we expect full year traffic to grow 3% to 81.5mln, we still have no visibility over next winter's yields, and on the basis that the recent yield weakness in close-in summer bookings does not continue, we see no reason to change our full year profit after tax guidance which remains at between €570m to €600m".

The statement contained the usual bombastic utterances relating to the UK Competition Commission’s (UK CC) alleged victimisation of Ryanair and its bid to take over rival Irish airline. Many of the comments rehash last week’s statement in which the company offered to sell its 29% shareholding in the rival carrier to any other EU airline that makes an offer for Aer Lingus and obtains acceptances from 50.1% of Aer Lingus shareholders.

“The UK CC has no credibility in this case having taken no action whatsoever on behalf of UK consumers in earlier mergers when BA bought BMI or Easyjet bought GB Airways,” O’Leary claimed.

Shares in Ryanair were down 2.7% to 6.98p in London trading during the morning session.

Quick facts: Ryanair Holdings plc

Price: 9.13 EUR

LSE:RYA
Market: LSE
Market Cap: €9.95 billion
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