Ryanair annual profit up 26% but warns on oil costs
May 23, 2011 ·
Ryanair said on Monday that its annual net profit rose by a quarter but Europe’s biggest no-frills airline also warned of a tough outlook as high fuel costs force it to ground planes and hike fares.
Ryanair said profit after tax jumped 26 percent to 401 million euros ($575 million) during the group’s financial year ending in March compared with 2009/10, as passenger traffic grew by eight percent and fares rose 12 percent.
Chief executive Michael O?Leary said the results were pleasing amid “higher oil prices, the global recession, and volcanic ash disruptions”.
The airline said it would ground 80 aircraft during the European winter, compared with 40 in 2009/10, in a bid to reduce costs.
“Higher oil prices next winter, and the refusal of some airports to offer lower charges, makes it more profitable to tactically ground up to 80 aircraft,” Ryanair said in its earnings statement.
Although the airline has hedged most of its fuel costs it said the overall economic outlook might dampen the travel market and was forecasting just four percent traffic growth in its current financial year.
The company’s results come as airlines face the threat of further flight cancellations caused by volcanic eruptions in Iceland.
France’s junior transport secretary Thierry Mariani warned on Monday that flights would be cancelled if an ash cloud from Iceland’s Grimsvoetn volcano blew over Europe, sending airline shares tumbling.
“One thing that is certain … is that if Europe is affected then flights will be cancelled,” Mariani said on Europe 1 radio, adding that it was too early to say for certain if it would.
Air safety officials said ash from the Grimsvoetn eruption may reach north Scotland by Tuesday before sweeping across Britain to hit France and Spain two days later.
But experts said the impact should not be as far-reaching as 2010, when a similar event caused widespread flight cancellations.