Ryanair posts record results

LOW-FARE airline Ryanair has posted record results for its 2012 financial year, but has warned that profits could fall by as much as 20 per cent this year as the airline continues to deal with high fuel costs.

Full-year results for the year to March 31st last posted yesterday show that profits at the airline increased 25 per cent to €503 million on revenues of €4.325 billion, a 19 per cent increase on the previous year.

A 16 per cent increase in fares was the main driver of revenue growth. Ryanair traffic rose 5 per cent during the year, but revenue from ancillary services outpaced this traffic growth, rising by 11 per cent to €886 million. Ancillary revenue now accounts for 21 per cent of Ryanair’s total revenue.

The airline maintained an “aggressive cost control” policy last year, it said, recording a net margin of 12 per cent, well ahead of most other airlines, the company said. Earnings per share grew 26 per cent to 34.1 cents compared to 26.97 cents in its 2011 fiscal year.

The company announced a special dividend payment of €0.34 per share which will be paid in November, subject to shareholder approval. This equates to €483 million and follows a special dividend payment of €500 million in 2010.

In total, Ryanair will have paid out €1.53 billion in dividends and share buybacks to shareholders over the past five years.

Despite the strong results, Ryanair said it expected profits to fall as much as 20 per cent in the current year to €400-€440 million. It is predicting a €320 million increase in fuel costs, with most of this expected in the first half.

However, the airline only expects to raise fares by 3 per cent next year, compared to 16 per cent this year, as consumer sentiment remains under pressure.

The airline, which grounded 80 aircraft last winter, again expects to cut winter capacity, according to deputy chief executive Michael Cawley yesterday, who noted that seasonally lower fares at this time of year made it “impossible to make money”.

He said the airline had “no visibility on the second six months at this stage”, hence was taking a “conservative view” on outlook.

On the question of oil prices, Mr Cawley said he believed that, in the long term, oil prices “have maxed out”. Noting the high price of oil had made technological innovation and producing oil more affordable, he said “peak oil” had not yet been reached.

Ryanair is currently hedged until about March next year.

Mr Cawley said he expected further airline consolidation or closure this year. The closure of Spanair and Malev during the spring period, when cashflow is usually strongest for airlines, “augurs very poorly for airlines in terms of more closures and consolidations later this year when things get particularly tight”, he said.

Ryanair’s share price closed up 0.4 per cent at €4.04 yesterday evening in Dublin, having spent much of the session in negative territory.