Airline shareholders may get €500m

RYANAIR Holdings Plc, Europe’s biggest discount airline, may return €500 million to shareholders in fiscal 2013, depending on the airline’s profitability and aircraft orders, chief financial officer Howard Miller said at a press briefing.

Ryanair Holdings said first-quarter earnings were little changed after higher fuel costs eroded gains from rising passenger numbers.

The airline aims to cut net debt to between €150m and €175m by year’s end, Mr Miller said.

Net income for the three months ended June 30 was €139.3m compared with €138.5m a year earlier. Profit missed the €156.8m estimate of eight analysts surveyed by Bloomberg.

Disruptions from the May eruption of an Icelandic volcano were less severe than that after a similar event in April 2010, when Dublin-based Ryanair was forced to cancel almost 10,000 flights, the carrier said. The quarterly passenger count rose 18% to 21.3m, according to the statement.

“In the teeth of a very tough recession and fuel bills going up by that much so quickly, it’s a reflection that the model is strong,” said Joe Gill, an analyst at Bloxham Securities in Dublin who has an “overweight” recommendation on Ryanair’s stock. “Ryanair and EasyJet are the two leaders of the pack at the moment.”

EasyJet Plc, Europe’s second-largest low-cost carrier, surged almost 18% on July 22 after saying pretax profit for the year ending September 31 will be as high as £230m (€261m), beating analyst estimates.

Fuel costs climbed 49% in the quarter to €427m, while total unit costs rose by 14%

The carrier took advantage of a dip in the oil price to add to its fuel hedging position, covering 20% of its requirements for the first quarter of its fiscal year ending 2013 at an average price of about $103 a barrel. The carrier has already hedged 90% of the current year’s fuel needs at about $86 a barrel.

Ryanair said it was keeping its guidance for net income for the full-year unchanged at €400m.

The airline will cut year-to-year capacity for the first time in its history for the winter season starting in October as fuel costs threaten to render dozens of routes unprofitable, chief executive officer Michael O’Leary said May 23.

Pilot, cabin crew and engineering posts may be cut and passenger growth will be limited to about 4%, half last year’s pace, he said at the time.