Ryanair Takes Off On Profit

on Nov 5, 2012

**Q3 Results**

Ryanair (LON:RYA), the Irish low-cost airline, today (05.11) announced third-quarter profit of €15 million (£12 million) compared to a loss of €10 million (£8 million) for the same period last year. Revenues increased by 13 percent to €844 million (£675 million) as traffic fell 2 percent and average fares rose 17 percent. Unit costs went up to 11 percent due to a 7 percent increase in sector lengths and an 18 percent increase in fuel costs.

Michael O’Leary, chief executive at the airline, on the Q3 results:
“We are pleased to report a Q3 profit of €15m which is ahead of expectations due to benign weather conditions in December (compared to widespread snow closures and de-icing in Dec 2010) and a better yield performance as we grounded 80 aircraft and cut traffic by 2%. The 17% rise in average fares (which includes our optional baggage fees) is due to reduced seat capacity, longer sectors, and higher competitor fares/fuel surcharges. Ancillary revenues grew 6% to €177m and rose by 8% on a per pax basis. We extended our successful reserved seat service to all routes from January 10th.”

The carrier lifted its forecast for the year to March to a profit between €490 million and €520 million (£392-£416 million) from its previous guidance of €400 million and €440 million (£320-£352 million).
Last week Ryanair reported that Manchester, Liverpool and East Midlands airports witnessed a 1 million passenger increase this year with nine new routes soon to be operational. The development is expected to create 1,000 new jobs. “Our 34 Manchester routes (including 5 new to Corfu, Krakow, Lanzarote , Paphos and Trapani), 39 Liverpool routes (including 2 new to Lublin and Zadar) and 38 East Midlands routes (including 2 new to Marseille and Menorca) will deliver almost 7 million passengers and sustain over 7,000 jobs at Manchester, Liverpool and East Midlands airports in 2013.” said Mr O’Leary on Wednesday 31 October.

!m[“Ancillary” Fees Give Momentum to Low-Cost Airlines](/uploads/story/715/thumbs/pic1_inline.png)The low-cost airline operates more than 1,500 flights per day from some 50 bases and 1,400 low fare routes across 28 countries. It has a fleet of 283 new Boeing 737-800 aircrafts with orders of additional 26 aircrafts expected to be delivered next year. The carrier has a team of more than 8,500 people and expects to carry 75 million passengers in the current fiscal year

In the past three months Ryanair’s share price has risen by 12.5 percent and closed at £4.54 on Friday 2 November.
**Extra Fees Provide Boost for Airlines**
Last month Amadeus, a travel technology provider, partnered with IdeaWorksCompany, an aviation consultancy, carried out a study which showed that airlines around the world will collect an estimated £22 billion in extra fees and charges in 2012. This figure represents an increase of 11 percent on last year’s total and is almost 40 percent more than what carriers received in 2010. As total airline income remains stagnant, the research shows how dependent airlines have become on “ancillary” revenue from baggage charges and administration fees to car hire sales and in-flight food and drink to maintain their revenue. The £22 billion figure is likely to increase as charges for checked luggage continue to rise – Ryanair increased its fee to £25 per-flight for a single bag.
According to airlines, the additional charges allow them to keep their headline fares low but an increasing number of passengers claim these “ancillary” fees are making it harder to compare fares across carriers. A survey of 11,500 people by TripAdvisor shows about 73 percent would boycott airlines that impose a hand luggage fee.


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