Low-cost airline says profits rose 13% on last year – with revenues from extras such as seat reservations rising 20%
Low-cost airline Ryanair has unveiled record profits but warned growth was likely to slow this year as a result of the backdrop in Europe and rising fuel costs.
The Dublin-based carrier said profits after tax rose 13% to €569m (£481m) in the year to the end of March, while revenue also rose by 13% to €4.9bn.
Growth in ancillary revenues – extras on top of ticket prices including paying to reserve a seat – outpaced both profit and traffic growth, rising 20% to €1.06bn, or 22% of total revenue.
Michael O'Leary, the chief executive, said that in the context of high oil prices during a European recession, the results were "testimony to the strength of Ryanair's ultra-low cost model".
He warned however that growth this year was likely to slow, predicting full-year profit of between €570m and €600m. "With almost zero yield visibility into the second half and the EU-wide recession, we expect that there will continue to be downward pressure on yields which will dampen full-year profit growth," he said.
Ryanair's fuel bill rose by more than €290m last year and represents 45% of total costs, but the company felt sufficiently confident to say that further shareholder returns were "possible" by the end of the 2015 financial year, having returned almost €500m to shareholders in November through a special dividend.
Ryanair's deputy chief executive, Howard Millar, said the airline was "very pleased" with the figures for customer seat reservations, which he said were particularly popular on its longer flights to destinations like the Canary Islands, and among business passengers.
He added that it was unlikely Ryanair would move to fully reserved seating because it might slow turnaround times as boarding customers feel less inclined to rush for a seat.
The airline carried 79.3 million passengers last year, up 5%, and expects that to increase to 81.5 million passengers this year and 100 million over the next five years, giving it a 20% share of the European short-haul market.
The airline operates more than 1,600 routes, and is targeting further expansion including growth in Greece and possibly flights to Israel. It is now the number one carrier in Ireland, Spain, Italy and Poland, and number three in the UK.
It opened seven new bases over the year, including Chania in Greece, Krakow in Poland, and Marrakech in Morocco.
Despite forecasting slower growth this year, Ryanair said it stood to benefit from the difficulties facing some of its rivals in Europe who are cutting short-haul capacity.
"Most of our competitors are either in retreat or not growing significantly," said Millar.
The company said there were significant gains to be made in Germany, Scandinavia and central Europe in particular, where Air Berlin, SAS and LOT continue to restructure, while it is also in discussion about expanding its bases at Stansted and Dublin airports as early as this September.
Ryanair expects to ground around 60 aircraft in the coming winter, fewer than the 80 grounded last winter.
Ryanair has 175 new Boeing 737 aircraft on order for delivery between 2014 and 2018, providing "controlled and profitable growth" of around 5% a year, according to Millar.
O'Leary said in the results statement that the European commission's decision in February to block Ryanair's third offer for Irish airline Aer Lingus was "politically motivated" and inexplicable. He described a UK Competition Commission inquiry into its six-and-a-half year-old minority stake in Aer Lingus as "even more bizarre".
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