Ryanair posts first third quarter loss in three years

Ryanair has reported its first third quarter loss since 2010 as it cut fares to boost demand over winter.

The low cost carrier made a loss after tax of €35.2m (£29m) for the three months to December 31 compared to a €18.1m post-tax profit during the same period in 2012.

Although airlines usually make losses over the winter, it is the first time Ryanair has made a third quarter loss since 2010.

Passenger numbers during the period increased 6pc to 18.3 million but revenue dipped to €964m from €969m previously as revenue per passenger fell 6pc.

The carrier, which issued two shock profit warnings in the autumn, grew ancillary charges – which include food and drink onboard – but fares declined 9pc.

Ryanair is facing growing competition from expanding low cost rivals such as Vueling and Norwegian and has also admitted easyJet “wiped the floor with us” by introducing customer service improvements much earlier.

The airline is still guiding towards full year profits of around €510m – a figure which was revised down twice following profit warnings in September and November.

Ryanair chief executive, Michael O’Leary, said the third quarter loss was “in line” with previous guidance.

Mr O’Leary, who is known for his colourful outbursts, is taking a step back from the public spotlight as Ryanair introduces a more corporate image. It has rolled out a raft of customer service improvements including, most recently, the introduction of fully allocated seating across all of its flights.

Michael Cawley, deputy chief executive, admitted that Ryanair had been “beaten by the competition”, speaking to Radio Four’s Today Programme on Monday morning.

Daily Telegraph

Cash-strapped airline Alitalia rejects Ryanair’s collaboration offer

Alitalia has rebuffed an offer from Ryanair to feed passengers into its long-haul routes and help boost the Italian carrier’s profitability.

“Alitalia … has its own strategy, an industrial plan, a fleet and its own crew that allow it to have the necessary passenger traffic to feed its international and intercontinental connections leaving from the hub at Fiumicino airport,” Alitalia said in a statement.

Budget airlines are usually based further from city centers, and Ryanair wanted to leverage the new routes it has secured from Rome’s Fiumicino, which is also Alitalia’s hub.

“Ryanair believes that its offer to feed Alitalia’s international hub at Fiumicino, and seek opportunities to work together and help Alitalia to recover, can help new investors and Alitalia’s management in returning to profitability and reliability,” Ryanair said in a statement.

Alitalia, the target of a government-engineered €500m rescue plan, said it had its own restructuring plan in place and offered similar prices to Ryanair, suggesting the two firms were not natural partners.

“At hub airports in all developed countries, cooperation is avoided between hub carriers and low-cost airlines. It is not by chance that low-cost airlines find space and operate in small airports dozens of kilometers from the cities,” it said.

Italy’s flag carrier has made a profit only a few times in its 67-year history and is running out of cash again.

The deadline for shareholders to subscribe to a 300 million euro capital increase, intended to buy the airline time as it looks for a cash-rich foreign partner, expires on Wednesday.

Earlier this month, Alitalia’s board approved a revised business plan, promising deep cost cuts to make the struggling airline more competitive.

Reuters

Ryanair blames lower fares for latest profit warning

Ryanair is on course for its first fall in profits in five years, saying that increased competition and a weak economic backdrop will force it to cut fares by up to 10% for the winter months.

The budget airline issued its second profit warning in recent months after average fares fell 2% during the first half of the financial year. It said fares were likely to fall by up to 10% by the end of the financial year to 31 March 2014, despite slightly higher forward bookings.

The Irish budget airline cut its full-year profit guidance to around €510m (£432m) from €570m, “due entirely to this lower fare environment”. It would be Ryanair’s first fall in profit since 2009.

“People have less money to spend,” the airline’s chief financial officer, Howard Millar, told Bloomberg. “We had a strong August, since then we’ve started to see a weakening environment.”

The bad news sent its shares down 10% and hit the wider airline sector, with easyJet and British Airways group IAG shares both sharply lower.

Ryanair had already hit investors with a surprise profits warning in September, cautioning at that time that profits might fall at the lower end or below its previous range.

Ryanir’s chief executive, Michael O’Leary, told shareholders at the company’s annual meeting in the same month that he recognised the need to address the “abrupt culture” at the airline, known for its no-frills service and additional charges.

“We should try to eliminate things that unnecessarily [annoy customers]. I am very happy to take the blame or responsibility if we have a macho or abrupt culture. Some of that may well be my own personal character deformities,” he said at the time.

O’Leary said on Monday that the airline had responded to the dip in forward fares and yields by lowering it full year traffic target to just under 81 million from over 81.5 million.

“We also released a range of lower fares and aggressive seat sales to stimulate traffic, load factors and bookings across all markets,” he added.

“Market pricing remains weak, so we will continue to promote low fare seat sales throughout the remainder of both Q3 and Q4.

“Forward bookings are running slightly ahead of last year, but the softness in fares and yields continues.”

Profit after tax rose 1% to €602m in the first six months of the year to 30 September, with passenger numbers up 2% at 49m.

Revenue increased 5% to €3.25m.

Ryanair completed €177m of share buy-backs in the first half, and said it would press ahead with its plan to return up to €600m to shareholders through buy-backs and special dividends before the end of the 2015 financial year.

IATA Raises Airline Industry Profit Forecast

Global airlines should post an industry profit of USD$12.7 billion this year, an increase from a previous USD$10.6 billion forecast, as lower oil prices and belt-tightening offset difficult economic conditions, industry group IATA said on Monday.

However, the International Air Transport Association said margins remained weak amid Europe’s ongoing debt crisis.

“The day-to-day challenges of keeping revenues ahead of costs remain monumental,” IATA director general Tony Tyler said at a meeting of more than 200 airlines in Cape Town.

“On average, airlines will earn about USD$4 for every passenger, which is less than the cost of a sandwich in most places,” he told Reuters Television.

Addressing reporters later, Tyler said record passenger numbers and growth in “ancillary” revenues were the two key reasons driving improved profitability.

Airlines are expected to fill 80.3 percent of seats and transport an unprecedented 3.13 billion passengers in 2013, up from 79.2 percent and 2.98 billion respectively last year, as operational changes and better capacity management filter through.

Tyler said ancillary revenues would rise to USD$36 billion, or 5 percent of total turnover, as airlines unbundle more services from base fares and charge for additional services such as meals, extra baggage and seats.

“These are significant factors that are driving performance,” Tyler said.

(Reuters)

Aer Lingus operating profits up 40.7%

Aer Lingus have announced an operating profit for 2012 of €69.1 million, up 40.7% from €49.1 million in 2011. The operating margin was also strong, up to 5.0% for 2012 compared to 3.8% in the previous year.

During 2012 the average yield per passenger increased by 7% to €120.15. Long haul yields remained particularly strong, increasing by 9.6% while short haul yields were up 3.8%.

There was also good news in terms of revenue for the year which at €1,393.3 million, represented an increase of 8.2%, while cash on the balance sheet grew to €908.5million and debt reduced by 7.9% to €531.6million.

2012 was a record year in terms of passenger numbers. With a total of 10.8 million passengers flown, including Aer Lingus Regional and the Madrid – Washington codeshare route, this is the highest number of passengers that Aer Lingus have ever carried in a single year.

Based on the positive performance the Aer Lingus board is proposing to pay an increased dividend of 4 cent per share for 2012.

Ryanair reports 503 M Euro Profit

Ryanair has reported record profit of 503 M Euro , up 25% on last year and evenue rose by 19% to 4.3bn euros. Breaking that down, traffic increased by 5% and average revenue per passenger went up sharply by 16%, which helped offset the 30% rise in fuel costs.

“Recession, austerity, currency concerns and lower fares at new and growing bases in Hungary, Poland, provincial UK and Spain will make it difficult to repeat this year’s record results,” Ryanair said in a statement.

Michael O’Leary said this morning that his airline could benefit in some respects from the gloomy economic outlook.”People don’t stop going on holiday. They just switch to lower cost carriers,” he said.

However, it warned profits in the current financial year could be lower.It forecast annual profits of between 400m euros and 440m euros for the year to the end of March 2013.

http://www.bbc.co.uk/news/business-18141549