RYANAIR’S SHARE price rose by just under 1 per cent in Dublin yesterday in spite of the company reporting a “disappointing” €10.3 million loss for the three months to the end of December.
Ryanair chief executive Michael O’Leary said the airline was on track to break even in its third quarter but its earnings were affected by air traffic control strikes in continental Europe and “ridiculous” airport closures related to the bad weather in December.
Ryanair cancelled 3,000 flights in the third quarter due to a variety of disruptions. By contrast, it cancelled only 1,400 flights in the previous fiscal year.
The airline, however, said it was “confident” that its full year net profit would be “towards the upper end” of its previously guided range of €380-400 million.
With Ryanair having recorded a net profit, before exceptional items, of €441 million in the first nine months of its financial year, this indicates that the airline will make a loss of at least €41 million in the three months to the end of March.
In a conference call with analysts yesterday, Mr O’Leary described them as a “solid set of results”.
Ryanair’s third-quarter loss was marginally down on the same period of 2009 but its revenues rose by 22 per cent to €746 million. Passenger numbers were up 6 per cent at 17 million.
The results show upward pressure on a number of expenses. Overall, unit costs rose by 15 per cent to €746 million due to a 14 per cent rise in flight hours, as the airline added longer routes to its schedule.
Fuel costs rose by 37 per cent to €283.7 million, while staff expenses were up 9 per cent at €89.3 million.
After two years of a pay freeze, Mr O’Leary said Ryanair staff would get a “modest” rise in their wages when the matter was considered in late March or early April. This would reflect the rebound in the company’s profitability, he added.
Ryanair’s average fare rose by 15 per cent to €34 in quarter three while the average revenue per passenger was up by the same percentage to €44.
Ryanair finance director Howard Millar told The Irish Timesyesterday that its average fare would probably rise to €39 by end of the year.
“Our plan is to slow down our growth rate and push up average fares,” he added.
With oil prices rising in recent weeks, Ryanair has strengthened its fuel hedging position.
Current spot prices are at about $890 a tonne. Ryanair has hedged 90 per cent of its fourth-quarter requirement at $750 a tonne and is 80 per cent hedged for its next financial year at an average price of $800 a tonne.
“We are well hedged for the full year but on a long-term basis, oil prices are not looking good for the industry,” Mr Millar said. “It’s a headwind we don’t like.”
He added that Ryanair was preparing to sue the Spanish government for disruptions caused to its services due to strikes by air traffic controllers last year.
“We’re preparing to file the documents,” he said. “We’re setting down a marker now.”