Ryanair Annual Profit Rises 13%

Net profit rose to 569 million euros, or $734 million, in the year ending March 31, surpassing last year’s profit of 503 million euros, Ryanair said. Revenue also climbed by 13 percent, to 4.9 billion euros, as traffic increased by 5 percent to just over 79 million passengers.

While recession and austerity, combined with high fuel prices, have led Ryanair’s higher-cost rivals to retrench and cut capacity across their networks, the Dublin-based carrier has thrived, adding new routes and service in countries like Greece, Morocco and Croatia.

The airline — already Europe’s largest by passenger numbers, with a fleet of more than 300 aircraft — recently announced plans to order 175 new Boeing 737 jets worth more than $15 billion at list prices, which it expects will help fuel an expansion to more than 100 million passengers before the end of the decade.

In a statement, Michael O’Leary, the chief executive, said the strong results were ‘’testimony to the strength of Ryanair’s ultra-low-cost model,’’ and he predicted the carrier would be able to achieve a 20 percent share of the intra-European air travel market over the next five years. Ryanair’s current share of the European market is around 12 percent.

‘’Our new-route teams continue to handle more growth opportunities than our current fleet expansion allows,’’ Mr. O’Leary said, adding that Ryanair was considering adding new connections to airports in Germany, Scandinavia and Central Europe to take advantage of cutbacks at rivals like Air Berlin, SAS and LOT, the Polish flag carrier.

Analysts said the main brake on Ryanair’s growth in the short- to medium-term would be the rate at which it can bring its newly ordered jets into service.

‘’Their big constraint is that they really have no planes coming in until 2016,’’ said Stephen Furlong, an airline analyst with Davy Stockbrokers in Dublin. Provided that capacity is added incrementally, to preserve revenue per passenger, he said, ‘’I don’t see any reason why they can’t be 20 to 25 percent of the market.’’

Known for offering cheap baseline fares that it pads with added optional fees for everything from credit-card payments to assigned seats, Ryanair said its so-called ancillary revenue surged by 20 percent last year — four times the pace of its traffic growth — to just over 1 billion euros. That was more than one-fifth of total revenue.

Some of that gain, analysts said, followed the introduction last year of an optional reserved seating fee, which ranges from 10 to 20 euros one-way, depending on the route. Mr. O’Leary, in a conference call with analysts, declined to say how much revenue the new fee had generated. Roughly one-quarter of Ryanair’s seats are available only to passengers who have paid the reservation fee.

Ryanair said it expected passenger and profit growth to continue this year, albeit at a slightly slower pace as recession takes hold across a larger swath of the euro zone. The airline forecast annual traffic growth of 3 percent to 81.5 million passengers. Stubbornly high fuel costs, which now represent 45 percent of Ryanair’s total operating expenses, are expected to limit earnings to between 570 million and 600 million euros, in line with last year, the airline said.

Article source: http://www.nytimes.com/2013/05/21/business/global/ryanair-annual-profit-rises-13.html?partner=rss&emc=rss