Ryanair expects growth to slow as lower fares eat profits

Ryanair, has released financial results for the quarter ended December 31, 2003 showing record profits and traffic figures, and fares were on average 11% lower than the equivalent period last year.

Passenger volume was up by 3.9 million to 6.1 million for the same period last year, an increase of 54%.

Meanwhile the airline reported a revenue rise of 37% to €255m, and an adjusted profit after tax of €4.7m, up 10% on the same period last year.

Operating costs rose by 42% - this was less than the rate of traffic growth - as unit costs fell by 8%.

The airline has retained a cumulative after tax profit margin of over 20%, and has closing cash balances of €1.2bn.

During this quarter Ryanair beat competitor Easyjet to become Europe's largest low fares airline and it also overtook BA's Britain/Europe traffic.

Ryanair remains cautious in its outlook for fares and yields, and predicts a drop on last year of 25-30% for the final quarter, based on bookings for the first three calendar months of 2004.

Overall, the group said there could be a drop in net profit of up to 10% to approximately €215m for the current fiscal year.

Chief executive Michael O'Leary said: "We are very pleased with the strong growth in traffic and profits for the third quarter which demonstrates the success of our strategy of rapid capacity expansion across new bases and new routes, over the past year."

He also said that the airline doesn't expect any further weakness of sterling against the euro, and from May forward, Ryanair's rate of capacity growth will fall from over 50% for the past two years to just 20% per annum.

He indicated that the two new bases (Rome Ciampino and Barcelona Girona) will be significantly stronger performers than some of the new routes and bases launched in previous years.