Low cost airline flies into the red
LOW cost airline Ryanair - which flies from Durham Tees Valley Airport - today said it had swung into the red with third-quarter losses of £90.3m, but raised full-year profit expectations thanks to recent plunging fuel costs.
The carrier now expects to report an annual profit of between £44m and £71m, having previously forecast that it would only break even.
Ryanair was battered by last year’s oil price bubble, which saw its fuel costs soar by 71% in the final three months of 2008.
However, oil prices have since collapsed amid the global economic downturn.
Ryanair, which files to Dublin, Alicante and Barcelona Girona from Teesside, said it also expects to return to “substantial profitability” in the next financial year in light of lower fuel costs.
Its third quarter losses compare to post-tax profits of £31m a year ago.
It said the performance was “disappointing”, but added passenger traffic was rising as cash-strapped consumers switched to lower cost travel.
Ryanair’s passenger numbers rose 13% to 14 million in the three months to December 31.
The Dublin-based airline, which is led by chief executive Michael O’Leary, cut air fares by 9% on average to lure in cost-conscious travellers.
The fare cuts came despite Ryanair forking out an extra £291m on fuel between October and December.
The group expects fares to fall by more than 10% in its next financial year, although the recession could force prices down even lower.
“The longer and deeper this recession, the better it will be for the lowest cost producers in every sector,” said Mr O’Leary.
Ryanair also confirmed that it was unlikely to make another offer for rival Dublin carrier Aer Lingus.
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