Ryanair posted an 85% fall in Q1 net profit today as its fuel bill almost doubled and warned it could make a full-year loss of up to €60 million if oil prices stayed high and fares fell.
The low-cost carrier said adjusted profit after tax for the three months to the end of June had come in at €21 million. That compared with a net income forecast of €48.8 million by brokerage Davy. Ryanair said it had made use of a recent fall in oil prices and hedged 90% of its fuel needs for September at $129 per barrel (€81), 80% for the Q3 at $124 per barrel (€78), but remained unhedged for the Q4. “On the basis of our existing fuel hedges, Q4 oil prices at approx. $130 per barrel (€82), and average fares falling by 5% for the full year, we expect to record a full year result of between breakeven and a loss of €60 million,” CEO Michael O’Leary said in a statement.
Ryanair said Q1 revenues grew by 12% to €777 million. That was well below the €865.4 million average of five forecasts in a Reuters survey and lower than the most cautious of the five analysts, who predicted €836.4 million. The airline said consumer confidence was plummeting in an emerging recession in the UK and Ireland, which it planned to respond to by cutting fares more aggressively than competitors. “The outlook for the remainder of the fiscal year which is entirely dependent on fares and fuel prices remains poor,” O’Leary said. He reiterated however that Ryanair’s more than €2.2 billion in cash will help it weather the industry downturn and anticipates a strong rebound in earnings as rivals with higher costs or less assets suffer. (Reuters)