SHARES IN Ryanair rose by 5.4 per cent to just under €2.85 in Dublin yesterday in spite of the airline warning that it would probably only break even in the year to the end of March 2009.
This assessment was based on the price of oil remaining at $130 a barrel and Ryanair achieving a 5 per cent rise in its average fare when baggage and check-in charges are included.
"It's not absolutely certain that we will achieve a 5 per cent [fare] increase, but we will certainly be attempting to achieve it," said Seán Coyle, Ryanair's director of schedule revenues.
He said much would depend on the performance of sterling against the euro and consumer sentiment. "We see softer demand, principally in the UK, where sterling has declined against the euro," Mr Coyle said.
He said Ryanair had recently experienced a 14 per cent decline in fares sold in the UK compared with 12 months ago.
Ryanair said it would post a loss of about €125 million if oil remained at its current level and if it failed to achieve an increase in fares this year. This sober assessment of future trading came against a backdrop of strong profitability in the financial year just ended.
Ryanair said yesterday that its after-tax profit for the 12 months to the end of March rose by 20 per cent to €480.9 million. Its revenue increased by 21 per cent to €2.7 billion and passenger numbers were up 20 per cent to 50.9 million.
Ryanair's load factor was unchanged at 82 per cent, while its average fare, including baggage and airport check-in fees, declined by 1 per cent to €43.7.
The airline is aiming to grow passenger numbers to 59 million in the current year.
Ryanair took a writedown of €92 million on its 29.2 per cent stake in Aer Lingus, reflecting the decline in its rival's valuation. Ryanair bought Aer Lingus shares at an average of €2.52 - Aer Lingus closed yesterday at a record low of €1.56.
Ryanair said it would mothball 20 aircraft this year in an attempt to cut costs, mostly at London Stansted and Dublin airports. Mr Coyle said three or four aircraft would be grounded in Dublin. He said more planes could be left on the tarmac if the price of oil continued to rise.
He said Ryanair had achieved savings of €20 million in airport expenses and should get similar savings in handling costs when kiosk check-in machines are installed at airports from August.
He said Ryanair would take a legal challenge against the aviation regulator's decision to allow the Dublin Airport Authority to charge for these kiosks. "It remains to be seen if we will be successful with that or not," he added.
Trials of an in-flight mobile phone service will begin in July on 14 aircraft.
Mr Coyle accepted that Ryanair had made a mistake in not hedging its fuel costs when oil was priced at $100. Just 10 per cent of its fuel requirement in the third quarter of its financial year is hedged at €70 a barrel. "It was a mistake not to hedge at levels up to $130. We're admitting that mistake."
