RYANAIR Q1 REVENUES GROW 11%, TRAFFIC GROWS 6% TO 22.5M PROFIT’S DECLINE 29% TO €99M – FULL YEAR GUIDANCE UNCHANGED.

2012-07-30 — /travelprnews.com/ — Ryanair, Europe’s only ultra-low cost airline today (Jul 30) announced that Q1 revenues increased 11% to €1,284m as traffic grew 6% and ave. fares rose 4%.  Unit costs rose 10% mainly due to a 27% (€117m) increase in fuel costs which led to a €40m decline in Q1 profit-as previously guided-to €99m.

Summary Q1 Results (IFRS) in Euro.

Ryanair’s CEO, Michael O’Leary, said:

“As we previously guided, significantly higher fuel costs caused Q1 profits to fall by €40m (from €139m last year’s) to €99m. Our 6% traffic growth combined with a 4% rise in ave. fares led to an 11% increase in Revenues. Ancillary sales grew by 15% to €286m (outpacing traffic growth) accounting for 22% of total revenues. Operating unit costs rose 10% as fuel increased 27% (by €117m) to €544m. Fuel amounted to 47% of total operating costs. We were hedged at $820 pt in Q1 last year compared to $1000 pt this year a price increase of 22%. As a result Q1 will suffer the largest fuel cost rise in FY13 as the pricing differential narrows significantly over the remaining three quarters of the year.

Q1 yield increases were dampened by the EU wide recession, austerity measures, and heavily discounted fares at our new base launches in Cyprus, Denmark, Hungary, Poland, Provincial UK and Spain. Excluding fuel, Q1 unit costs rose by 3%, as we rigorously controlled costs, despite a 2% rise in flight crew pay, higher charges at certain airports, and the impact on costs of stronger Sterling against the Euro.

Despite this challenging environment Ryanair continues to grow its traffic across Europe while maintaining the lowest unit costs in the airline industry, and generating healthy profits as evidenced by the 8% after tax margin achieved in the first quarter.

Our new bases (Billund, Budapest, Manchester, Palma, Paphos and Wroclaw) are enjoying high load factors, although some smaller bases such as Budapest, Warsaw and Wroclaw are doing so at very low fares. We announced our 51st base in Maastricht (Holland), which opens in December, and we plan to announce more new routes and up to 2 new bases later this year. We continue to see significant opportunities to grow across Europe as many airports aggressively compete to attract Ryanair’s traffic growth.

On July 1 the Spanish government more than doubled airport taxes at AENA’s already high cost airports in Madrid and Barcelona, with smaller increases at other Spanish airports. These tax increases have already led to winter capacity cuts by Ryanair and many other airlines in Spain. These cuts will damage Spanish tourism and jobs in a country that already suffers up to 50% youth unemployment. It has been repeatedly proven that airport charges/tax increases lead to falling traffic, and the Spanish government must reverse these unjustified increases if they wish to grow Spain’s tourism and generate new jobs.

Ryanair welcomes the UK Court of Appeal’s decision last week to dismiss the BAA/Ferrovial latest (7th) appeal against the 2008 Competition Commission’s recommendation that Stansted be sold to promote competition and the consumer interest. We now call on the UK Competition Commission to expedite the sale of Stansted. While BAA Stansted traffic declines (by 3% in June and 7% for H1 2012), both Heathrow and Gatwick have grown. We believe Stansted’s traffic decline can be reversed under new ownership which will lead to competition, lower charges, and improved passenger service at Stansted.

We are 90% hedged for FY13 at approx. $1000 pt, up 21% on last year’s price. We have recently hedged 50% of our H1 FY14 requirement at $940 pt, however these lower fuel prices will be more than offset by lower euro to dollar exchange rates. High oil prices and Europe’s recession will drive further consolidation and more airline closures this winter. This will open more growth opportunities for Ryanair because we have the youngest, most fuel efficient fleet as well as the lowest fares and costs.

Our outlook remains cautious for the year. We expect full year traffic to grow 4% (7% in H1, and 1% in H2 due to winter capacity cuts). We expect positive yields will continue in Q2 and anticipate smaller fuel cost increases (due to higher Q2 comparable last year and fuel saving measures we have implemented). Currently, we have no visibility of next winter’s yields but expect that continuing austerity, EU recession, and lower yields at new bases will restrain fare growth. Until we get some H2 yield visibility our guidance for FY 13 remains unchanged, in the range of €400m to €440m as previously guided”.

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