ATW Daily News

Ryanair reports surging first-half profit, issues Boeing, second-half warnings

Tuesday November 3, 2009

Ryanair yesterday threatened to cancel or defer aircraft orders from Boeing if it fails to secure a fleet-renewal agreement before year end as the LCC announced an adjusted net profit of €250.5 million ($368.5 million) in the fiscal second quarter ended Sept. 30, a 29.4% increase from the €193.6 million earned in the year-ago period.

Despite the improvement, CEO Michael O'Leary expressed frustration. "I regret to report that we have made little progress in our discussions with Boeing for an order of 200 aircraft for delivery between 2013 and 2016," he said, adding that the carrier informed the manufacturer that if the order is not finalized by year end, "then Ryanair will end its relationship with Boeing and confirm a series of order deferrals and cancellations. We see no point in continuing to grow rapidly in a declining yield environment where our main aircraft partner is unwilling to play its part in our cost reduction program by passing on some of the enormous savings which Boeing have enjoyed both from suppliers and more efficient manufacturing in recent years."

He added: "If we cannot invest our surplus cash efficiently in new aircraft, then we should distribute it to shareholders." By the end of November, Ryanair will operate a fleet of 210 737-800s with firm orders for a further 102 scheduled for delivery over the next 2.5 years. Some 48 aircraft were due to join its fleet next year.

Second-quarter operating revenue decreased 4% year-over-year to €992.1 million. Scheduled passenger revenue fell 6% to €811.1 million due to an 18% rise in passenger volume offset by a 20% decrease in average fare. Ancillary revenue grew by just 3% to €181 million and total revenue per passenger fell 19%. Load factor remained flat at 88%.

Operating expenses fell 16% to €694.2 million owing to a 42% decrease in fuel costs and a 5% reduction in unit cost excluding fuel. CASK including fuel fell 29%. Operating profit rose 41.4% to €297.9 million from €210.7 million last year.

For the fiscal first half, the Irish LCC increased adjusted net profit (excluding an exceptional €13.5 million impairment on its shareholding in Aer Lingus) by 80% to €387 million from the €214.6 million earned in the year-ago period.

"Ryanair's ability to grow both traffic and profits during the half year is a testament to the strength of Ryanair's lowest fare model and our relentless cost discipline," O'Leary said, while warning that both the third and fourth quarters will be loss-making as it expects average fares to decline by up to 20%. "Despite this, our full-year guidance remains unchanged and will be substantially profitable, at a time when many of our competitors are losing money, consolidating or going bust."

by Cathy Buyck

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