Ryanair shares take off after its results defy the analysts
RYANAIR boss Michael O'Leary said he foresees no material economic recovery in Europe over the course of the next year and is "very reluctant" to share in more optimistic predictions by other airlines of an upturn within the aviation sector.
His comments came as the carrier posted a loss of just €10.9m for the quarter to the end of December. That performance was significantly better than the roughly €35m that had been pencilled in by many analysts and compared to a €101.5m loss in the same period of 2008.
Ryanair's yields -- or the average fare it earns from each passenger -- fell 12pc year-on-year. However, this was markedly better than the 20pc that the airline itself had forecast.
The company boosted its full-year profit guidance from the "low end" of a €200m to €300m range to about €275m for the fiscal 2010 year, which ends in March. The fourth-quarter net loss is likely to be in the region of €100m.
"It is really difficult out there," said Mr O'Leary, who added that revenue for the period was 1pc higher at €612m. Ryanair flew 14pc more passengers in the quarter, at 16m.
Shares in the carrier soared more than 7pc in Dublin as investors digested the better-than-expected forecasts, which were coupled with a 4pc decline in unit costs for the period, excluding fuel. The shares closed up 24 cent at €3.58.
Ryanair's fuel costs fell 37pc year-on-year in the quarter to €207m, while it has the majority of the next financial year's fuel requirements hedged at $720 a tonne. That is relatively attractive compared to the current spot price of approximately $654 a tonne.
The airline's overall airport and handling charges also declined 11pc during the quarter compared to the same period in 2008, as the carrier was offered more competitive pricing deals by mainland European airports trying to attract traffic. The percentage of passengers checking in baggage is now "routinely" just about 25pc, said Mr O'Leary.
He added that Ireland now accounts for less than 15pc of Ryanair's traffic, but that he intends to "swamp" routes between Dublin and sun destinations this summer, such as the Canary Islands and Faro.
That move is likely to impact on Aer Lingus, which has had a strong presence on such destinations.
Last week, Aer Lingus chief executive Christoph Mueller outlined a new strategy for the former state-owned carrier and said the low-cost aviation model wasn't sustainable.
Ryanair deputy chief executive Howard Millar claimed yesterday that Mr Mueller's planned hybrid strategy of low fares coupled with a degree of more traditional legacy service was bringing Aer Lingus "back to the nineties".
He added: "People who stand in the middle of the road generally get run down."
Mr Millar also predicted that traffic at Dublin Airport will fall by 10pc this year, to about 18.5m passengers.
Mr O'Leary said it was unlikely that Ryanair would seek to expand its presence at Gatwick, after the airport's new chief executive signalled that he would try to attract more traffic.
The Ryanair boss also poured cold water on rumours that the airline is to invest in a small Brazilian carrier called Webjet.
"In 25 years we've never invested in an airline outside of Europe and it's not going to happen now either," he said.