Posted on: 03 February 2014 by Mark Howells
Ryanair has reported a third quarter loss of €35 million, which is in line with previous guidance given to the financial markets.
Traffic grew 6% to 18 million passengers. Revenue per passenger declined 6%, as strong ancillary revenue growth offset a 9% fall in fares. Excluding fuel, sector length adjusted unit costs fell by 9%. Ryanair’s full year profit guidance remains unchanged at approximately €510 million.
“Our 3Q loss of €35 million is in line with previous guidance and is entirely due to a 9% fall in average fares and weaker sterling,” explained Ryanair CEO Michael O’Leary. “We responded to this weaker pricing environment last September with seat promotions and lower fares which stimulated traffic across all markets resulting in 6% growth in 3Q, and a 1% rise in monthly load factors. Ancillary revenues grew by 13%, significantly faster than traffic growth due to strong customer uptake of reserved seating, priority boarding, and higher credit card fees.
“Our new routes and bases are performing well this winter, albeit at weaker yields, as high-fare competitors cut capacity and restructure,” O’Leary continued. “In December we opened 4 new Italian bases in Rome (Fiumicino), Catania, Lamezia, and Palermo in response to concerns about Alitalia and its high fare domestic routes. We then announced 4 new bases for spring 2014 at Brussels (Zaventem) which opens on 28 February, Athens and Thessaloniki (both 1 April) and Lisbon (2 April). Advance bookings on these new routes are well ahead of expectations, with customers welcoming Ryanair’s lower fare alternative. We expect these new bases to provide substantial growth opportunities for Ryanair, particularly as we commence deliveries in September 2014 of our new 175 Boeing 737-800 aircraft order.
“Over the next 5 years, as Ryanair grows from 80 million to over 110 million customers a year, we expect a substantial portion of this growth will be at primary airports, where high fare incumbents are financially weak and restructuring, and the remainder arising at secondary airports driven by attractive low cost growth incentives,” added O’Leary.
With its fuel, Ryanair is 90% hedged for FY14 at a cost of $980 per tonne (approximately $98 per barrel). “We have taken advantage of recent oil prices and dollar weakness to extend our hedge position to 90% for FY15 at $960 per tonne (around $96 per barrel), which together with the benefit of our euro/dollar hedging programme will deliver fuel cost savings of approximately €80 million in 2015,” O’Leary noted.