Posted on: 31 January 2011 by Ross McSweeny
Ryanair has announced a slightly reduced 3Q loss of €10.3 million, down from a 3Q loss in the airline’s last financial year of €10.9 million.
Total revenues grew by 22% to €746 million, as traffic increased 6% to 17 million and average fares rose by 15%. The airline’s unit costs increased by a similar 15% due, it says, to a 14% increase in flight hours, as average sector length rose by 7%. Excluding fuel (which was up by 37%), unit costs rose by 8%.
Commenting on the results, Ryanair’s CEO Michael O’Leary stated, “This small 3Q loss of €10 million is disappointing, as we were on track to break even, but earnings were hit by a series of ATC strikes/walkouts in 3Q, compounded by a spate of bad weather airport closures in December. The scale of these disruptions is evident by the fact that we cancelled over 3,000 flights in 3Q, compared to over 1,400 cancellations during the previous fiscal year.
“With constrained capacity growth, we delivered impressive scheduled revenue growth, with traffic up 6% and average fares rising 15%. On top of this, ancillary revenues grew by 20%, considerably ahead of our 6% traffic growth. It would appear that the shorthaul fuel surcharges imposed by many of Europe’s flag carriers, allied to the high and rising fares charged by some of our not so low-fare competitors, is creating opportunities for Ryanair to grow, even during the winter period, at slightly higher fares.
“Unit costs increased by 15% in the quarter due to a 14% increase in flight hours, (as average sector length rose by 7%), a 37% increase in our fuel bill, and the impact on ownership costs of sitting up to 40 aircraft on the ground during the winter months,” O’Leary continued. “Despite a 14% increase in flight hours during the quarter we delivered strong performance on costs as staff costs rose by 9%, and airport and handling charges increased by 6%. Ryanair’s relentless focus on costs will continue.
“Although oil prices have risen significantly in recent months, Ryanair continues to benefit from a favourable fuel hedging strategy. While current spot prices are approximately $890 per tonne, we are 90% hedged for 4Q in fiscal year (FY) 2011 at $750 per tonne, and 80% hedged for FY2012, at an average price of $800 per tonne. We have also hedged 70% of our dollar requirements for FY2012 at an average rate of €$1.34 compared to €/$1.40 for FY2011,” O’Leary explained.
“Our outlook for 4Q and the remainder of FY2011 remains largely unchanged. Easter does not fall in the current 4Q, which makes the comparatives challenging,” O’Leary noted. “We expect traffic and average fares to continue to benefit from a better mix of new routes and bases. We expect our unit cost performance in 4Q to be marginally better thanks to the launch of new routes in February and March which will reduce the number of grounded aircraft by comparison with 3Q. Accordingly, we are now confident that our 4Q and full-year results will be towards the upper end of our previously guided range of a net profit after tax of between €380 million to €400 million after tax,” O’Leary concluded.