Ryanair Q1 Profit Down 21%, Backs Forecast

(RTTNews) - Irish low-cost airline Ryanair Holdings Plc. (RYA.L, RYAAY) Monday reported a sharp decline in profit for the first quarter as higher fuel costs, and lower fares due to the timing of Easter offset higher traffic and strong ancillary revenues. The company also backed its full year outlook.

Ryanair's CEO, Michael O'Leary, said, "As ever, our outlook remains cautious for the full year as market conditions are tough with recession, austerity, high fuel costs, and excessive Government taxes (most recently in Belgium) impacting air travel demand and yields. While we expect full year traffic to grow 3 percent to 81.5m, we still have no visibility over next winter's yields..."

On the basis that the recent yield weakness in close-in summer bookings does not continue, the airline said it sees no reason to change its full year profit after tax guidance which remains at between 570 million euros to 600 million euros.

For the fiscal year ended March 31, the company's profit was 569.3 million euros.

For the first quarter, profit attributable to equity holders of parent fell 21 percent to 78.1 million euros from 98.8 million euros. Earnings per share dropped to 5.40 euros from 6.83 euros.

Profit before tax declined to 88.5 million euros from 112.5 million euros.

Total quarterly operating revenues from continuing operations increased 5 percent to 1.342 billion euros from 1.284 billion euros, as 1.2 percent drop in scheduled revenues were more than offset by a 25 percent surge in ancillary revenues.

The company noted that ancillary revenues were driven by the successful development of reserved seating, priority boarding, and higher admin\credit card fees.

Traffic, measured in passenger numbers, increased 3 percent to 23.2 million from 22.5 million last year. Meanwhile, average fares fell 4 percent due to the timing of Easter and the impact of the June French ATC strikes.

Total revenue per passenger increased 1 percent on strong ancillary growth, while load factor remained flat at 82 percent compared to last year.

In the quarter, operating margin decreased 2 points to 8 percent whilst operating profit decreased 22 percent to 103.3 million euros.

Total operating expenses increased 8 percent to 1.24 million euros due to a 6 percent growth in fuel prices, the higher level of activity and operating costs associated with the growth of the airline. Unit costs excluding fuel increased 6 percent, slightly faster than the increase in sector length.

Looking ahead, the company said it expects second-quarter yields to rise despite last year's challenging comparables, although yields on close-in summer bookings have been slightly weaker in recent weeks due to the heat wave in Northern Europe.

In London, Ryanair shares are currently trading at 7 euros, down 0.17 euros or 2.43 percent.