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Ryanair dives into red for first time
Low-cost airline makes its first ever annual loss after being hit by higher fuel costs and a drop in its Aer Lingus stake
The Irish carrier lost €169m last year, compared with a profit of €481m the year before, on higher sales of €2.94bn, an increase of 8.4 per cent. But it was the net loss that was the focus of investors' concerns, with the airline joining rivals BA and Virgin in seeing a huge leap in its fuel costs, to €1.26bn in 2008, from €791.3m the year before.
The jump in expenses was not the company's only problem in the period, with the 29.8 per cent stake Ryanair holds in Irish flag carrier Aer Lingus dropping in value by €222m and depreciation on aircraft disposals costing it another €51.6m.
The Aer Lingus stake came about after the company's attempt to buy the company was rebuffed and meant it could only look on as performance at the national airline deteriorated.
The results were worse than analysts had expected and the fact that it actually made a profit of €105m after stripping out one-of factors was of little solace to investors.
However fuel costs are now considerably lower, after the price of oil fell from its high of $147 per barrel last summer, and the airline expects to make between €200m and €300m in the current financial year.
Ryanair grew its passenger numbers by 15 per cent in the year and Chief executive Michael O'Leary put a gloss on the figures, saying "I think the reason we're growing so strongly is you know we're this year going to carry twice the total number of passengers as British Airways..."
He plans to grow his way out of trouble by cutting fares by up to 20 per cent during this year and hopes for passenger numbers of 67m as a result.
WHAT THEY ARE SAYINGDan Milmo, the Guardian: "Ryanair's competitor easyJet is embroiled in an internicine row about its expansion plans, but the Dublin carrier today reiterated its determination to grow at breakneck speed. It plans to expand its customer base to 67m this year by cutting average fares by 20 per cent, it said, with add-on charges such as mandatory check-in fees helping make up the shortfall. Ryanair said its €2.3bn cash pile is still rising, in sharp contrast with BA and Aer Lingus which are burning through cash to sustain business models that have a far heavier dependence on expensive long-haul routes." ·
