Ryanair warns of tough times ahead despite 26% profit rise

PROFITS grew by 26% at Ryanair last year, but the airline warned of flat earnings ahead in the face of rising fuel costs.

The airline yesterday reported an adjusted after-tax profit of €401 million for the 12 months to the end of March. This was up from a profit of €319m in the previous year.

Adjusted earnings per share were up 25% at 26.97c and full-year revenue rose 21% to €3.63 billion. Pre-tax profits rose from €341m to €421m.

Ryanair upped its fares by 12% during the year and a similar rise is anticipated in its current year, but the airline still grew its passenger numbers by 8% to 72 million people and is expecting a further 4% jump this year.

However, high fuel prices mean the airline will cut its winter capacity this year, keeping around 80 planes grounded over the period.

The company is anticipating flat profits of around €400m for its current year and is likely to launch around 100 new routes.

Ryanair’s deputy chief executive Michael Cawley said the airline’s fuel bill is likely to rise by as much as €350m in its current year, but that management sees “no immediate urgency” in hedging on future fuel, with average oil prices currently around $110 per barrel.

He said Ryanair is better placed than many of its competitors to maintain some level of growth in the face of high oil prices.

Mr Cawley said further dividends would be paid to shareholders, but fleet talks had completely stalled with Boeing, although early stage discussions have taken place with rival firm Airbus.

He added that a repeat of last year’s volcanic ash problems on the back of the latest eruption in Iceland is unlikely. Ryanair took a hit of around €50m from last year’s disruptions

“We don’t expect any more problems. We’re not concerned about the actual ash cloud, only the irrational response to it,” Mr Cawley remarked.

Ryanair welcomed the Government’s plan to abolish the tourist tax on people flying out of the country, but said its promise to deliver five million extra visitors to Ireland each year is more reliant on the Dublin Airport Authority lowering its airport charges.

“Ireland has the highest airport charges in Europe and the problem is a fundamental one for Irish tourism. This country needs to get competitive and we have to make Ireland competitive for airlines again,” Mr Cawley said.

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