Ryanair witnessed strong profits in its third fiscal quarter ended December as the company enjoyed extensive pre-holiday reservations. The increase in fuel prices, however, did not seem to affect the profits of the airline.
Ryanair Unaffected by High Fuel Costs
On the 28th of January, Ryanair Holdings Plc., the Europe’s largest low budget airline, reported its annual third quarter profits which were ahead of expectations. The airline saw a 21 percent jump in its third quarter net profit to over €18 million. As a result, the management team decided to raise the profit outlook. The airline has achieved sales of €96 million accounting for a 15 percent increase since 2012. The airline expects the annual net profit to exceed €540 million by the year ending March 2013 which would account for a 7 percent increase in the net income. The profits of the third quarter of 2012 were roughly €14.9 million while the net income amounted to approximately €490 million. The target profit was repositioned from €520 million to €540 million after the third quarter profit reports of the airline. As it was underlined, the company’s performance was mainly driven by strong demand in the UK, Germany and Scandinavia.
The Dublin-based Ryanair claimed that the airline experienced strong demand in the months preceding December due the festive season of Christmas. The airline provided an option to reserve seats which in turn helped to lift the rate of the airline tickets in Northern Europe. In the three months to the end of December, the Dublin-based company witnessed an 8 percent increase in its average fare cost. With more than 17 million passengers travelling through Ryanair, the airline traffic increased by over 3 percent in the third fiscal quarter. The fuel prices rose dramatically by €81 million during the third quarter. Despite the 24 percent increase in fuel costs, the fares of the airline were not affected. Due to its low cost of fares, Ryanair has emerged as a strong contender while many other airlines have been severely hit by the Europe’s stagnant economy and increases in fuel prices. The airline expects only a 2-3 percent increase in fares and €82.5 million passengers in 2014 due to the delayed deliveries of the new flights. Also, the fourth quarter is said to experience a slowdown in demand for Ryanair as the passenger traffic is expected to decline by about 400,000 due to the grounding of aircrafts in Europe.
€694 million Aer Lingus bid
In a separate statement, Ryanair announced that it would hand over about half the short haul business of Aer Lingus Ltd. to Flybe Ltd. and British Airways provided that Ryanair is allowed to take over Aer Lingus in a €694 million bid. The proposal will be accepted once the European Union regulators agree to the takeover offer. According to the offer, all the 46 Dublin routes that overlap with the routes of Aer Lingus would be eliminated, thus creating room for competition among the Irish carriers. “The remedies involve two upfront buyers each basing aircraft in Ireland to take over and operate a substantial part of Aer Lingus’ existing route network and short-haul business,” underlined Michael O’Leary, chief executive officer at Ryanair Ltd.
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