LONDON: Europe's largest budget airline Ryanair Holdings Plc. posted a record net profit at 237 million euro for the half-year ending 30 September, up 18 per cent over the corresponding previous year period. The good show apart, the company was cautious in its forecast for the remaining part of the fiscal.
Chief executive Michael O'Leary said the company anticipated fare differentials eroding as the fuel surchargers will be forced to reduce their underlying fares to compete with the company's lower prices.
However, its net profit guidance remains unchanged -- year to end-March net profit of 295 million euro, an increase of 10 per cent over the previous year. The airline expects significant increases in passenger volumes and anticipates that third quarter yields will be broadly in line with last year.
O'Leary said he expected intense competition this winter as there will be fewer low fare carriers as higher fuel prices will force airlines out of the industry.
The company's revenue for the first-half increased by 33 per cent to 946.2 million euro. Ancillary revenues grew 40 per cent, significantly in car rental, hotels, travel insurance, rail and bus tickets and on-board sales. The company said as ancillary revenue grows, it will increase the level of free seats from the current 25 per cent.
Expenditure on account of fuel increased by 108 per cent to 236.9 million euro and the company said its decision not to impose a fuel surcharge, helped it increase the number of passengers carried during the period by 29 per cent to 18 million. All other costs fell by 7 per cent during the half year, due to the additions of more cost-efficient Boeing 737-800s, new lower cost airport arrangements and cost controls in all other areas.
Yields or average fares increased by 3 per cent, while unit costs increased 8 per cent.
O'Leary indicated that the company intends to make all flights free if on-board gambling, expected to be introduced on a trial basis in, takes off in a big way.
The airline expects to carry around 35 million passengers this year. It had recently talked about its plans to double customer numbers and profits by 2012.
The company has hedged 90 per cent of its fuel costs until March 2006. It is yet to take out any further insurance against high oil prices but it is monitoring the market closely with a view to hedging its requirements for summer 2006.
Posted
on : Mon, 07 Nov 2005 13:10 GMT | Business News
By : Mike Lawson
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