Ryanair grounds 10% of fleet to cut costs

Published on Tuesday 3 June 2008 10:24

BUDGET airline Ryanair is to ground up to ten per cent of its fleet this winter in a bid to combat soaring airport charges.

The carrier, which recently opened a new base at Edinburgh Airport, saw full year after-tax net profits rise by 10 per cent to 381 million.

But it wants to cut back following a doubling of landing and handling charges by airport operator BAA.

And chief executive Michael O'Leary renewed his calls for the break-up of BAA's airport monopoly.

Despite rising oil prices, the company said it has managed to mitigate the impact through bulk buying at cheaper prices. But it admitted that this year's prospects are entirely dependent on the oil price, with the company only likely to break even if prices remain around $130 a barrel for the rest of the year.

Mr O'Leary said: "Delivering record profits and traffic during a year of much higher costs is a testimony to the strength of the Ryanair lowest fare model.

"Unit costs rose by two per cent reflecting the unjustified doubling of airport charges by the BAA Stansted monopoly, higher charges at the Dublin Airport monopoly and a six per cent increase in average sector length.

"Cost increases over the winter were limited by our decision to ground seven aircraft at Stansted and we will extend this program next Winter by grounding up to 20 aircraft, approximately 10 per cent of our fleet, mainly at Stansted and Dublin where high airport charges make it more profitable to ground aircraft rather than fly them through the winter."

Ryanair carried 50.9 million passengers during the past year, 20 per cent more than the previous year.

Average fares including baggage reduced by one per cent to 35 despite rising costs, although they are expected to increase by five per cent within the coming year.

Mr O'Leary blamed higher airport charges on the "abysmal" failure of industry regulators and said his overriding concern for the next 12 months was the "irrational" price of oil.

He said: "The Civil Aviation Authority's recent proposal to allow the BAA Stansted monopoly to raise prices by up to 150 per cent on top of last year's doubling of airport charges proves yet again that the UK's airport regulatory regime has failed abysmally.

"Ryanair renews its call for the break up of the UK's BAA airport monopoly. Ryanair believes that splitting the London and Scottish airports into separately competing companies will bring about real competition, expedite capacity increases, improve passenger services and lower airport charges."

Despite the rising cost of oil, he pledged that the airline would continue to absorb costs, "even if it means that our profits will fall in the short-term".