Ryanair profits surge but O’Leary still in attack mode

Published on Tuesday 31 January 2012 00:00

RYANAIR boss Michael O’Leary took a fresh swipe at BAA and the Civil Aviation Authority’s (CAA) “inadequate” regulatory regime yesterday as he unveiled a forecast-beating €14.9 million (£12.5m) profit for the third quarter.

This year’s milder weather and a hike in ticket prices offset increased fuel costs and lower passenger numbers, helping to reverse a €10.3m net loss during the same period in 2010.

The no-frills carrier raised its full-year profits guidance off the back of the third-quarter figures, from €440m to €480m. The upgrade saw its shares hit a four-year high at one point in trading yesterday before slipping back.

O’Leary used the opportunity to accuse the CAA of allowing BAA to continue running a monopoly and renewed his calls for the sale of Stansted airport to be brought forward.

He said the fact that BAA would pay dividends of £240m this year to Spanish parent Ferrovial and other shareholders, despite a poor performance at Stansted, was “further evidence that it is generating monopoly profits under the CAA’s inadequate regulatory regime”.

Ryanair points out that charges for airlines using Stansted have doubled over the past five years but passenger traffic has slumped 26 per cent to 18 million between 2007 and 2011.

“The BAA monopoly’s shareholders are being unfairly enriched at the expense of Stansted airport users who continue to suffer high charges and inadequate service,” O’Leary said.

“We again call on the UK government and the CAA to bring forward the sale of Stansted to enable competition between London airports to deliver lower airport charges and improved customer service where the BAA airport monopoly and CAA’s ‘inadequate’ regulatory regime has repeatedly failed.”

Revenues during the three months to 31 December reached €844m from €746m last year but passenger figures were down 2 per cent to 16.7 million. However, the airline insisted its decision to ground 80 of its 270 planes over the winter had resulted in better yields, with average fares jumping 17 per cent. Revenues from “ancillary activities”, such as onboard sales, grew 6 per cent to €177m.

Gert Zonnefeld, analyst with Panmure Gordon, said the “strong” figures were ahead of expectations and maintained his “buy” recommendation on the shares.

Zonnefeld sees scope for further rises in tickets prices as capacity growth in the industry starts to dwindle and competitors also raise their fares.

He said these factors would translate for Ryanair into “attractive and sustainable profit growth over the medium term”.

O’Leary once again lambasted the UK government over airport passenger duty (APD) as the industry faces a rise at double the rate of inflation in April.

The outspoken airline boss said a similar tax in Holland was scrapped after just one year after the detrimental effect on tourism was found to be bigger than the amount raised by the levy.

“UK APD was doubled in 2007 to £10 and was increased again to £12 this year and has resulted in the UK having the highest aviation taxes in the world, to the detriment of the UK’s tourism industry, which was one of the UK’s most important revenue earners before its visitor numbers declined over the past four year,” he said in a statement.

All of the major airline bosses recently made a collective call for the abolition of APD.

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