Ryanair profits rise 26% to €401m for FY11

Ryanair has announced a 26% increase in annual profits to €401 million for the 2010-11 fiscal year which ended on 31 March 2011.

Revenues increased 21% to €3,630 million as traffic grew 8% and average fares rose 12%. Unit costs rose by 11% due to higher oil prices and a 10% increase in sector length. Excluding fuel (up 37% to €1,226 million) unit costs rose by just 3%.

Announcing these results Ryanair’s CEO, Michael O’Leary, commented, “We were pleased to deliver a 26% increase in profits and 8% traffic growth, despite higher oil prices, the global recession, and volcanic ash disruptions in 1Q10. With another strong performance in inflight sales, ancillaries grew 21% to €802 million, somewhat faster than traffic growth, and amounted to 22% of total revenues.

“In 2010, following a 27% hike in fees, Dublin airport traffic fell by 3 million passengers to just over 18 million, a fall of 30% from its 2007 peak of 24.5 million. Dublin’s traffic continued to decline in 1Q11. To reverse this disastrous collapse, and return to tourism growth, the DAA airport monopoly should be broken up and replaced with competing terminals and airports, which will deliver competitive airport charges,” O’Leary declared. “Unless the new Government introduces these reforms then traffic at the DAA airports will continue to fall, leading to further tourism and job losses in the Irish economy. We welcome the Government’s recent decision to scrap the tourist tax as a step in the right direction, but unless accompanied by competitive airport charges, traffic growth will not return at the Government owned, high cost, Irish airports.

“Last year 14,000 Ryanair flights were cancelled due to volcanic ash disruptions, airport snow closures, and repeated ATC strikes. The unfair and discriminatory EU 261 regulations require airlines to pay ‘right to care’ and/or compensation during these events even though they are beyond the control of any airline. It is discriminatory that train, ferry, and coach operators (as well as insurance companies) escape this liability during force majeure events, yet EU 261 compels airlines to suffer these costs. These discriminatory regulations must be reformed to provide a fair and level playing field for all EU transport operators.

“Higher oil prices will force competitors to continue to increase fares and fuel surcharges which makes Ryanair’s lower fares even more attractive,” O’Leary predicted. “In many cases competitor’s fuel surcharges are higher than Ryanair’s lead-in fares. Higher oil prices will lead to further consolidations, increased competitor losses, and more airlines going broke. This creates further growth opportunities for Ryanair because we operate the most fuel efficient aircraft, have the lowest operating costs, and the strongest balance sheet. We expect to increase market share and expand into new markets as high oil prices force competitors to further cut capacity (or go bust) this winter.

“Ryanair is 90% hedged for FY12 at $820 per tonne (approximately $82 per barrel), a 12% price increase on last year, but significantly below current prices. Higher oil prices next winter, and the refusal of some airports to offer lower charges, makes it more profitable to tactically ground up to 80 aircraft (40 last winter) rather than suffer losses operating them to high cost airports at low winter yields,” O’Leary explained. “Although we expect to grow traffic in FY12 by 4% to over 75 million passengers, this will be characterised by strong growth of up to 10% in H1, but these steeper winter capacity cuts will cause monthly traffic in H2 to fall by around 4%. Despite these winter capacity cuts we still expect our full year fuel bill to increase by approximately €350 million.

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