Robin Pagnamenta
Over 900 restaurants nationwide. Find your nearest now
Ryanair today revealed profits fell 85 per cent during the first quarter, which Europe’s largest airline blamed on a near-100 per cent rise in its fuel bill.
Ryanair said profits for the quarter ended June 30 fell from €139 million last year to €21 million. It also admitted that it may only break even for the year or post a loss of up to €60 million (£47.4 million).
The no-frills airline's shares fell 18 per cent to €2.63 and those of its rivals also dipped after Ryanair's warning. Shares in BA, which is set to report first-quarter results on Friday, fell 3.95 per cent to 237p while stock in budget rival, easyJet, dropped by 7 per cent to 311p.
Michael O’Leary, chief executive of Ryanair, said the Irish airline’s fuel bill had risen by 93 per cent to €367 million and represented half of total operating costs, up from 36 per cent last year.
However, he said rocketing oil prices, which reached a record high of $147 per barrel earlier this month, were not the death knell for low cost airlines such as Ryanair, as some pundits have predicted.
He said: “The demise of low fare air travel is again being predicted by high fare airlines like BA and others, who are still losing short-haul traffic. Higher oil prices won’t end low fare travel, as consumers become more price sensitive and switch away from high fare, fuel surcharging airlines.”
The company reported falling profits, despite a 19 per cent increase in passenger numbers to 15 million people.
Mr O’Leary said the fall in earnings was amplified by the early Easter holiday this year, which meant Ryanair did not post extra earnings from the holiday period in its first-quarter results for 2008.
The carrier was recently forced to cut flights from Stansted and Dublin airports in an effort to reduce costs. Mr O'Leary insisted that, despite these cutbacks, traffic would grow by 9 per cent this winter.
Other carriers are being forced to introduce similar cuts to cope with an increasingly tough economic environment. BA is expected to unveil its programme of short-haul reductions on Friday to accompany the airline's first-quarter results. They are expected to hit Gatwick, London's second largest airport, particularly hard.
Ryanair said it had exploited a recent fall in oil prices by hedging 90 per cent of its fuel requirements for September at $129 per barrel and 80 per cent for the third quarter at $124 per barrel, although it remained unhedged for the final quarter of the year.
Mr O'Leary added that consumer confidence in the UK and Ireland was “plummeting” in an “emerging economic recession” but said Ryanair would respond to by slashing fares more aggressively than competitors “to keep people flying and maintain high load factors”.
The moment your toes touch the sand and your gaze meets water, you know you’re in the Bahamas.
Risk, resilience and embracing new technology
Industry sectors news at a glance. Interactive heatmap, video and podcast
The inside track on current trends in the charity, not for profit and social enterprise sectors
Everything the Business Traveller needs to know to make a better trip
Shortcuts to help you find sections and articles
05/2005
£13,500
08/2008
£109,950
2005 / 55
£59,500
Great car insurance deals online
Circa £60,000
The Army Benevolent Fund
London
C£100K+
Chronophage
Isle of Man
12-15 days a year, c £12K
Springboard
London
£Competitive
American Airlines
Heathrow, London
Great Investment, River Views
One and Two Bed Apartments
Wandsworth Town
Times Online Property Search will help you Find It
like nothing on Earth!
.
Must end 28 Feb 2009!
Save up to 25%
Amazing Far East Offers
Visit Malaysia from £755pp
Great travel insurance deals online
.
Contact our advertising team for advertising and sponsorship in Times Online, The Times and The Sunday Times, or place your advertisement.
Times Online Services: Dating | Jobs | Property Search | Used Cars | Holidays | Births, Marriages, Deaths | Subscriptions
News International associated websites: Globrix Property Search | Property Finder | Milkround
Copyright 2008 Times Newspapers Ltd.
This service is provided on Times Newspapers' standard Terms and Conditions. Please read our Privacy Policy.To inquire about a licence to reproduce material from Times Online, The Times or The Sunday Times, click here.This website is published by a member of the News International Group. News International Limited, 1 Virginia St, London E98 1XY, is the holding company for the News International group and is registered in England No 81701. VAT number GB 243 8054 69.
I fly every weekend between london and glasgow, Even have got a visa electron card to evade credit card booking fees. Only luxury at the moment while using the toilets in the aircraft. It costs Ryanair to maintain the toilets and stiil we can use them for free!!! Feel very grateful..
mano, london,
OLeary is always overstating the doom and gloom. It's part of his strategy.
Michael G., Belfast,
I have just booked Alitalia from London to Italy. It was not expensive, and actually cost less than some of the Ryanair flights on the same route (which I fly regularly). I'll continue doing this too: Ryanair has an attitude problem, and I for one have had enough of it.
Mary, London,
My heart bleeds for this money grabbing, poor customer service driven outfit.
Don't worry Micheal, you can recoup some of your losses by charging passengers £8 per flight for air . . . .
. . . . watch this space
Chris, Watford, England
the other explanation is that they have run out of suckers. Ryanair should not be surprised: frequent travellers will not tolerate open disdain for European rules, national flight safety regulators, passengers and staff
Mark, Casnewydd, UK
Does this mean it's a god time to buy shares in Ryanair?
Pete, Hertford,
With all the extra add - ons with Ryan air and weight restriction regarding luggage - I always check out both Low Cost and regular airlines and check which is more convenient as far as timing, luggage and cost is concerned. I recently travelled to London with Ryan and came back BA who cost less!
Simon, Arezzo, Italy
better service and no extra hidden charges might help fill Ryanair's seats
Mark Bowman, Glasgow,
You guys are all sour grapes. Of course it has to do with rising fuel costs. Where have you been lately? Though not a total fan of Ryanair, they have at least spearheaded cheaper flying and made it so that the man in the street can travel.
Louise, Perugia, Italy
Oh yes Gordon DO expand Heathrow. Finger on the pulse with the economy, environment and of course the UK electorate's popular opinion as usual!!
grant, london,
It has nothing to do with rising fuel costs, all the others have managed, but more to do with the insipid and continuous extra costs that keep being added on, Ryanair now costs more than virtually any other airline, including BA to many of its quoted destinations.
carbine, almeria, spain
And this comes as a shock to who exactly ? 'Free tickets' and 'cheap fares' was NEVER going to last.
85% drop in profits - shame. Couldn't happen to a nicer guy or a more customer friendly company - NOT !
Max, London,
Doesn't matter to me if RyanAir gos bust or not. Travelled with them a couple of times, never again !!
john , aylesbury,
Oh dear. I shouldn't laugh, should I?
Sarah, London,
For once and for all,there is no such thing as cheap air travel !We ALL pay for "cheap" flights whether we fly or not-the airlines receive massive subsidies(no VAT on Aviation fuel) .The low cost Airline model is now so obviously unsustainable,the Government must abandon airport expansion plans.
Philip, Braintree,
I thought that it was a bit strange when their boss thought that the oil price would stay around $37.Does he really know what he's doing?
stephen hulton, eure, france
Rayanair says that they have no fuel surcharge. Actually they do but it is disguised under other names: card payment fee, check-in fee, baggage fee, etc. They invent a new one every day! The truth is that the price difference between cheap airlines and "traditional" ones is dramatically reducing!
Michele, London, UK
Will RyanAir survive the winter if things are as bad as this now?
When the low cost model becomes high cost because of events beyond its control, passengers will prefer to pay a little more for a full service airline ticket.
Edna Burbridge, Engreve, France
Stop paying to chief so much money and ryan air will do well...
tony, HULL CITY,
Sounds like The Northern Rock business model.Assume plenty of cheap money avialable all the time.
Ryanair. Assume plenty of cheap oil available all the time.
Is that Harps I can hear in the background?.....
ronnie, bucks, UK
I'd propose it's less about rising fuel prices, and more about recruiting the dregs of personnel who together with the CEO treat their customers as if we're something on the bottom of their shoes.
Laura Roberts, London, UK
Less aggression and more charm might help to fill Ryanair's seats
Richard Roe, Stansted,