Ryanair profits down 26%

Ryanair, the Irish no-frills airline, announced a 26-percent drop in third-quarter net profit, blaming the fall on high fuel prices and intense competition.

The low-cost Dublin-based carrier posted net profit of 35.0 million euros (45.6 million dollars) for the three months to December, down from 47.5 million euros in the same period of 2003.

It under-performed analysts’ consensus forecast of 36.0 million euros.

Ryanair, Europe’s largest low-cost carrier, operating 217 routes to 93 destinations in 19 European countries, said that passenger numbers in the quarter grew by 13 percent to 6.9 million.

As a result, total operating revenue climbed 15 percent to 294.4 million euros, the company added.

Ryanair shares soared over 7.0 percent to 6.30 euros following the release of better-than-expected operating profits, which prompted a broker upgrade by Panmure Gordon.

Operating profits rose to 48.7 million euros, beating analysts’ forecasts ranging from 20 million euros to 43 million euros, the company added.

“Despite the difficult trading conditions, including record fuel prices and intense competition, we still delivered strong passenger growth and profits,” said group chief executive Michael O’Leary.

Yields — or average fares — “were similar to those achieved last year and better than our previous guidance of a decline of between five percent to 10 percent”, he added.

“Whilst yields and fuel prices are now somewhat better than originally forecast, sterling has weakened appreciably and this will have a downward impact on yields,” O’Leary said.

But he said that overall, the group’s results were a “testimony to the strength of the Ryanair ‘lowest cost’ model”.

Ryanair said that passenger bookings for the fourth quarter were in line with expectations but advised a cautious outlook for the remainder of the 2004-2005 fiscal year.

O’Leary noted that many of Europe’s major airlines had recently announced record losses, citing Italy’s Alitalia and Scandinavian carrier SAS.

“This is not a temporary phenomenon resulting from high oil prices, but a permanent market shift towards low-cost air travel, led by Ryanair,” he said.