Budget carrier Ryanair posted stronger than expected results for the three months to the end of June. The Irish airline reported a 21 per cent rise in profit after tax to €64.4 million. The record profits came despite a 112 per cent rise in fuel costs over the same period in 2004.
The figure was significantly ahead of industry forecasts of less than €60 million for the company's fiscal first quarter. Ryanair also overcame the early Easter this year, which saw heavier holiday traffic fall into the previous quarter, adversely affecting year-on-year comparisons.
Passenger yields rose 3 per cent on the year-ago period with passenger numbers 30 per cent ahead to 8.5 million. Revenue was 35 per cent stronger year on year at €404.6 million.
The results were materially boosted by tight control of costs. Unit costs per passenger fell by 6 per cent in the quarter at a time when they had been expected to rise. Stripping out the effects of fuel prices, costs fell 11 per cent.
The €11.2 million fall in the costs of ancillary services, such as the sale of car hire, hotel rooms and travel insurance, was the single biggest factor.
The company has increased its hedging against rising fuel prices for the rest of its financial year. While Ryanair has no hedge on fuel costs this month, it has hedged 90 per cent of its requirements over the winter months, up from 70 per cent previously, at an average price of $49 (€40) a barrel.
The company said it would "closely monitor forward prices with a view to hedging some or all of our requirements for the early part of summer 2006".
NCB analyst Shane Matthews noted that the group remained confident of achieving full year targets for a 9.7 per cent increase in adjusted net income to €295 million. "We see these numbers as being significant as they clearly confirm the fact that Ryanair has been able to pass on the higher fuel price to the consumer," he said.
The company acknowledged that it had benefited from the up-front fuel levies introduced by a number of rivals in the wake of the surge in crude oil prices.
Ryanair's new hub at Shannon has performed ahead of estimates in terms of passenger numbers according to the airline, although passenger yield is still below target. Chief operating officer Michael Cawley said a number of routes had performed particularly well and, while some of the British regional routes had yet to hit targets, the company's confidence in these services was reflected in its decision to launch further regional routes to Britain from the airport.
The airline admitted it had seen a fall in bookings in the immediate aftermath of the London bombings on July 7th and the failed attacks on July 21st but it said bookings had returned to normal levels after three or four days in each case.
Chief executive Michael O'Leary acknowledged that continued security concerns in Britain could impact on the airline. "If there are no further such attacks in London, we expect that our forward bookings will not be materially impacted," he said. "However, if there are further incidents in London, both bookings and yields could be adversely impacted."
Analyst Stephen Furlong at company broker Davy said Ryanair cautious outlook reflected the importance of the British capital to the airline. Forty of its 96 planes are based in London.
