Ryanair Q1 profits way above expectations |
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Wed, 02 Aug 2006 11:45
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LONDON - British airline Ryanair cautioned that it could well report a loss in the fourth quarter even after posting a record profit for the first three months. Stunning the shareholders, Europe's biggest budget airline revealed that its profits were at €115.7 million (£79 million), 80 percent higher than last year's figure.
However Ryanair officials said that by the end of the year the airline might report a loss for the first time since it was floated in 1997, due to rising fuel prices and excess capacity and lower fares by rival low-cost carriers. Ryanair Chief Executive Michael O'Leary said, "Our outlook for the remainder of this fiscal year remains cautious. We believe that the forthcoming winter will be characterized by much more difficult trading conditions. We would caution however, based on advanced bookings, that we do not expect this yield buoyancy to be maintained at similar levels during the second quarter or indeed the second half of the fiscal year".
The rise in profits has been attributed to the late timing of Easter, which has resulted in excessive passenger flow, increase in fares and the early launch of new routes.
The main concern for the airline is the rising fuel prices. Ryanair's fuel demand would be billed at $70 a barrel till the end of October and $74 a barrel for the months of November and December.
But if fuel prices do not get lower then Ryanair would report a loss for the fourth quarter of the financial year. “If oil prices are higher than $74 a barrel, we may even sustain a loss during the fourth quarter this year", O’Leary added. However O'Leary was confident that the company would report a profit of 5 percent to 15 percent for the whole year.
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