Ryanair counts cost of fuel rises and ash cloud

Published on Monday 19 July 2010 21:37

RISING fuel prices and the disruption caused by volcanic ash hit first-quarter profits at budget airline Ryanair.

The Irish carrier booked exceptional costs of €50 million (42.5m) due to the closure of European air space in April and May which saw 9,400 flights cancelled.

The costs cover compensations claims made by passengers for tickets, refreshments and accommodation and contributed to a fall in pre-tax profits for the quarter to 30 June to €104.6m from €134.6m a year earlier.

Fuel costs rose by 34 per cent to €287m due to higher oil prices and the introduction of new routes although revenues per passenger increased by 7 per cent through increased take-up of priority boarding and higher spending during flights.

Ryanair is due to open its 42nd and 43rd new bases, in Barcelona and Valencia in September and November respectively, and said yesterday it continued to see "enormous opportunities" to grow the business across Europe.

However, it recently announced that it will cut winter capacity in the UK by 16 per cent, including a 17 per cent reduction in its services at Stansted airport in Essex, where the carrier will handle 1.5 million fewer passengers than last winter. Ryanair chief executive Michael O'Leary cited the "damaging" Air Passenger Duty airport departure tax as a reason for the capacity reduction. The airline said it was still on track to achieve its forecasts for full-year profits.