Ryanair's profit grows 25 per cent

With fare rises offsetting the rise in fuel costs, the budget airline reports a record pre-tax profi

People queue at a Ryanair check-in desk at Dublin International Airport in Ireland. Credit: Getty Images

Despite a rocky year in which Ryanair had to ground 80 of its planes in the winter, the Irish low-cost airline has reported record annual pre-tax profits of €503m – an increase of 25 per cent, compared to €401m for the same period last year.

Basic earnings per share for the fiscal year ended 31 March 2012 were 34.10 cents (2011: 26.97 cents).

Revenue increased 19 per cent to €4.33bn (€3.63bn), while passenger traffic grew 5 per cent to 75.8 million.

Michael O’Leary, CEO of Ryanair, said:

This 25 per cent profit increase to a new record of €503m and 5 per cent traffic growth during a year of higher oil prices and deep recession in Europe was a commendable result. Our fuel bill rose over €360m as oil prices increased 16 per cent from $73 to $85pbl.

Excluding fuel, adjusted unit costs were flat during the year due to aggressive cost control, despite a modest company-wide pay increase, higher Eurocontrol fees and increased airport costs. Ancillary revenue outpaced traffic growth, rising by 11 per cent to €886m or 21 per cent of total revenue.

As a result of a 30 per cent increase in fuel costs and a 6 per cent increase in sector length, unit costs rose by 13 per cent. Excluding fuel, sector length adjusted unit costs were flat.

The airline’s balance sheet remains one of the strongest in the industry, with over €3.5bn in cash, despite having returned €1bn to shareholders over the past five years via four share buy-backs and a special dividend in 2010 of €0.34 per share.

During the year, the airline delivered 25 new aircraft, opened six new bases and launched 330 new routes.

Ryanair said that, after a year in office, the new government in Ireland has delivered no change or reform in the department of transport’s "failed policy of protecting the high cost DAA airport monopoly". Traffic at the three DAA airports has declined 25 per cent from 30 million in 2007 to 22 million in 2011.

The airline expects that any increase in fares will only partially offset higher fuel costs; accordingly, its net profit in fiscal year 2013 is expected be lower than in fiscal year 2012, in a range of between €400m to €440m.

Traffic next year is expected to grow by 5 per cent to just over 79 million passengers. First-half traffic is set to grow 7 per cent, while second-half traffic will grow by 3 per cent.

Ryanair remains concerned that recession, austerity, currency concerns and lower fares at new and growing bases in Hungary, Poland, the UK and Spain will make it difficult to repeat this year’s record results.