Ryanair forecasts full-year net profit despite heavy 3Q loss

By David Kaminski-Morrow

Irish budget carrier Ryanair is expecting to make a full-year, pre-exceptional net profit of €50-80 million ($63-102 million), up from earlier break-even expectations, despite a heavy third-quarter loss.

Ryanair has turned in a loss of nearly €102 million for the third quarter, ending 31 December, against a previous €35 million profit.

The carrier is attributing the reversal to the high cost of fuel. Fuel expenditure for the three-month period soared by 71% to €328 million.

But the carrier says the decline in fuel prices, combined with its decision not to hedge fuel for the fourth quarter, has "somewhat improved" its outlook. While some of the cost advantage will be diluted by weaker yields, and fares will be lower than forecast, it is expecting a smaller fourth quarter loss than previously predicted.

Third-quarter revenues increased by 6% to €605 million as passenger numbers rose by 13% to 14 million. Average fares fell by 9% to €34 but Ryanair claims this was "largely funded" by a 3% cut in non-fuel operating costs.

Chief executive Michael O'Leary describes the results as "disappointing" but "in line with expectations".

"The general economic environment remains extremely difficult, as the recession saps consumer confidence," he says, but claims that Ryanair is benefiting from defection of passengers to its low-fare model.

Ancillary revenues were up by 1%, to €132 million, and account for 22% of overall sales - up from 19% in the same quarter in 2007. Ryanair's cash balance at the end of the third quarter stood at €1.8 billion.