Ryanair has announced record annual profits of €569m, up 13% on last year despite higher oil costs. Revenues rose 13% to €4.88bn as traffic grew 5% to 79.3m passengers. Unit costs rose 8% mainly due to an 18% (€292m) increase in fuel. Excluding fuel unit costs rose by 3%, while avg. fares improved by 6%.
“Announcing these profits Ryanair’s, Michael O’Leary, said: “Delivering a 13% increase in profits and 5% traffic growth despite high oil prices during a European recession is testimony to the strength of Ryanair’s ultra-low cost model. Fuel costs rose by over €290m, and now represent 45% of total costs. Excluding fuel, unit costs were up 3% due to excessive and unjustified increases in Italian ATC, Eurocontrol and Spanish airport fees. Ancillary revenues outpaced traffic growth, rising 20% to €1,064m or 22% of total revenue.”
This summer Ryanair opened seven new bases, and more than 200 new routes. Nevertheless, O’Leary warned that despite having 9 additional aircraft and longer sectors “traffic growth this summer will be very modest at approx. 2%”. The airline intends to ground fewer aircraft next winter to deliver slightly faster H2 monthly growth it hopes will result in overall traffic growth for the full year rising by more than 2m to 81.5m passengers.
The airline reports forward bookings on new routes and bases this summer to be “ahead of expectations (albeit at modest yields) as competitor airlines continue to restructure and cut short-haul capacity”.
Looking ahead, Ryanair is considering new route opportunities in Germany, Scandinavia and central Europe.
O’Leary took the opportunity of the results announcement to again voice his disappointment with the EU’s decision to block its purchase of a stake in Aer Lingus. “We were disappointed that the European Commission in February 2013 decided to prohibit Ryanair’s third offer for Aer Lingus. It is bizarre that the EU can wave through BA’s offer for British Midland in Phase 1 with few remedies, yet months later reject Ryanair’s offer for Aer Lingus which was accompanied by a revolutionary remedies package delivering two upfront buyers to open competing bases in Dublin and Cork airports. We have no doubt that this was yet another politically motivated decision by Europe’s competition authority and it is inexplicable in the context of its stated policy of promoting European airline consolidation.”
He added that the UK’s Competition Commission review into its 6½ year old minority stake in Aer Lingus was “ bizarre” give that “it may have “lessened competition” between Ryanair and Aer Lingus”.
“Given that the UK Competition Commission has a legal duty of sincere co-operation with the EU, we believe they cannot make a contrary finding, and so this spurious and time wasting inquiry into a 6½ year old minority stake between two Irish airlines, one of whom (Aer Lingus) has a tiny presence in the UK market should now be abandoned in the light of the EU Commission’s finding that competition between Ryanair and Aer Lingus has intensified,” he said.
Ryanair is 90% hedged for FY’14 at $980 per tonne (approx. $98 p.bl) and has extended its hedges into FY’15 with 25% of H1 hedged at $930 per tonne (approx. $93 p.bl).