RYANAIR HAS swung back into profit after recording a 14 per cent increase in passenger numbers in the year to the end of March 2010.
The airline announced it would pay a dividend of €500 million to shareholders in October – the first since the company floated in 1997 – and said it would challenge “ludicrous” and “disportionate” EU rules governing compensation to stranded passengers.
Ryanair has shaken off the losses of the 2009 fiscal year despite the fact that the wider airline sector remains beleaguered by heavy losses, redundancies, cutbacks and bankruptcies.
The Irish airline bounced back with a €319 million net profit as costs fell 19 per cent, largely due to lower fuel prices.
The airline promised investors that the year ahead would bring new bases, further growth in passenger numbers – and higher fares.
As a result of the special dividend, Ryanair chief executive Michael O’Leary, who holds 4 per cent of the airline’s stock, will pocket €20 million.
The special dividend has been proposed as a result of Ryanair’s swelling cash balances, which it expects will increase by a further €1 billion by the end of 2013.
There may be a further €500 million dividend payable to shareholders if no new deal to buy aircraft is agreed with Boeing or Airbus.
Ryanair yesterday repeated its claims that the closure of European air space in April due to the volcanic ash cloud was “largely unnecessary” and that it was not acceptable for airlines to “become the insurer of last resort” in such cases.
It expected the flight cancellations would cost the company about €50 million, but said the final cost was not yet known. It said it had processed 90 per cent of the refund claims and taken on 100 staff to complete the task.
However, Mr O’Leary said Ryanair would challenge “10 or 20” of the most contentious compensation claims in local courts in the first instance and then in European courts.
Ryanair wants the European Parliament to cap compensation payments under the EU261 airline passenger legislation.
Ryanair deputy chief executive Michael Cawley criticised some passengers who “paid €25 or €50 for their ticket and are claiming thousands of euro” in the compensation process. “This disproportionality would be laughable if it wasn’t sad. It’s certainly sad for us.”
He added that Ryanair “could easily live with” the rules that apply to ferry travel, under which the compensation paid by ferry companies to stranded passengers is capped at double the price of the ticket.
The airline said fares would rise 5-10 per cent this year, while claimed a 13 per cent reduction in headline fares in 2009. It said it was in negotiation with 10 airports around Europe about opening bases, including some destinations to which it currently did not fly.
Ryanair: 2010 results (year ended March 31st)
Turnover: €2.98bn (+2%)
Pre-tax profit: €341m (€180m loss in previous year)
Net profit: €319m (+204%
Passenger numbers: 66.5 million (up 14%)
Load factor:82% (+1%)
SUMMARY
Lower fuel costs helped Ryanair to bounce back from the losses of its 2009 fiscal year.
Profits, revenues and passenger numbers all rose in the year to the end of March 2010, while unit costs excluding fuel fell 3 per cent.
Cash balances rose €535 million to €2.8 billion and are forecast to swell by a further €1 billion by the end of 2013. Because the average length of its routes is increasing, costs per passenger are expected to rise 4 per cent in 2010-11, while fuel costs will rise by €300 million. Excluding the impact of volcanic ash, Ryanair forecasts profits of €350-€375 million in the year ahead, up 10-15 per cent.
