Posted on: 07 November 2011 by Ross McSweeny
Ryanair has announced a 20% increase in half year profits to €544 million for the six months ending 30 September 2011.
Revenues rose by 24% to €2.712 billion, with traffic growing by 12% and average fares going up by 13%. Unit costs rose by 13% due mainly to longer sectors and a 37% increase in fuel costs. Excluding fuel, the airline noted that sector length adjusted unit costs did not increase at all.
Ryanair’s CEO, Michael O’Leary, commented, “We are pleased to report a 20% increase in the half year net profits. The 13% rise in average fares (which includes optional baggage fees) is due to slower growth, a better mix of new routes and bases, as well as rising competitor fares/fuel surcharges.
“Ancillary sales rose 15% to €487 million, slightly faster than traffic growth. We extended our reserved seating trial from 40 to 80 routes, and if successful we will extend it to more routes in our network. We also launched the Ryanair ‘Cash Passport’ Mastercard prepaid card in the UK and Italy, and we intend to roll it out across the network over the coming months, to provide passengers with a no cost prepaid card for use on Ryanair.com (to avoid our optional admininstration fees) and many other retailers.
“New routes and bases continue to perform well,” O’Leary continued. “Our 45th base in Manchester opened last week. Our 46th (Wroclaw, Poland) and 47th (Baden Baden, Germany) bases will start in March 2012. We also plan to open our 48th base at Warsaw Modlin as soon as our current negotiations with the airport have been concluded. The recession and higher oil prices continue to force competitors to consolidate, and cut capacity and routes, which creates further growth opportunities for Ryanair as European airports compete aggressively to win our route and traffic growth.
“Unit costs increased 13% primarily due to longer sectors and a 37% rise in fuel costs. Excluding fuel, sector length adjusted unit costs were flat, as we continued to rigorously control costs despite a 2% pay increase, higher Eurocontrol fees, and substantially higher charges at Dublin Airport which were recently described as ‘insane’ by Aer Lingus and ‘too excessive’ by Etihad.
“We are 90% hedged for FY12 at $820 per tonne (approximately $82 a barrel), up 12% on last year but significantly below current prices. We have recently extended our FY13 fuel cover and are 90% hedged for H1 at $990 per tonne ($99 a barrel) and 50% for H2 at $980 per tonne ($98 a barrel).
“Ryanair’s capacity cuts will mean that traffic in 2H12 will fall by 4%. In November, for example, we expect to report a traffic decline of 10% or almost 500,000 passengers as we ground up to 80 aircraft due to higher oil prices. While 1H12 yields were slightly better than forecast, our outlook remains cautious. Based on current third quarter bookings and very limited visibility into 4Q12, we now expect 2H12 yields to rise by up to 14%, slightly better than the 12% previously guided. Accordingly we are raising our full year net profit guidance by 10% from €400m to €440m, subject of course to the final outturn of 4Q12 yields,” O’Leary concluded.