Profit at Ryanair fell by 8 per cent in its last fiscal year, as higher fuel costs and a fall in fares hit the airline's figures.
The decline was its first annual profit drop in five years.
The company said profit after tax was €523 million for the year, down from €569 million. That was “disappointing” to the company, which has recently embarked on a drive to improve its customer service and website to win over travellers that includes revised policies and fees for baggage and check-ins.
The company has also invested significantly in a new advertising strategy, and plans to more than triple its marketing and ad spend this year compared with last year’s €10 million budget.
Revenue rose 3 per cent during the 12 month period on the back of a strong rise of 17 per cent in ancillary revenue, and passengers were also 3 per cent higher, at almost 82 million. But fares were down 4 per cent over the year, prompting the airline to take action in the second half of the year to present a new image to customers and reduce fares to entice customers back to Ryanair routes.
The company has opened four new bases in Athens, Brussels, Lisbon and Rome, and announced plans for three new bases in Cologne, Gdansk and Warsaw to cover the winter 2014 period.
It expects traffic for the upcoming fiscal year to grow by 4 per cent and load factors to rise 2 per cent to 85 per cent, with a “significant” rise in after tax profits to a range of between €580 million to €620 million.
Ryanair is also planning to target business passengers from autumn, with a service that will include a bigger bag allowance, same day flight changes and mobile boarding passes.
In a statement, chief executive, Michael O’Leary said that it was “disappointing” that profits fell 8 per cent , but added that the airline reacted quickly to the changing environment by cutting ticket prices.
Head of marketing, Kenny Jacobs, pointed out that the outcome was “slightly ahead” of what the company predicted last autumn. “We are satisfied with the overall result for the year,” he added.
Mr Jacobs confirmed that Ryanair is considering a bond issue to help pay for the 180 new aircraft that it has ordered from US manufacturer, Boeing, the first of which are due to arrive in September. “We will be talking about that in the coming weeks and months,” he said.
Credit ratings agency Fitch last week handed the airline a BBB+ rating, meaning it considers the Irish company to be a relatively low risk for lenders. Standard & Poors gave it a similar ranking in at the end of March.
Institutional lenders require companies to have two ratings before they will consider purchasing their bonds. Fitch’s announcement on Friday paved the way for Ryanair to tap capital markets for some of the cash required to pay for its new craft.
The airline intends footing the bill for the 737-800s, valued at around $12 billion, with a combination of its own resources, bonds and other sources. Ryanair had more than €3 billion cash on its balance sheet on March 31st.
Ryanair shares were up almost 6 per cent at €6.723 earlier.
