The Irish budget airline Ryanair has reported a profit of €98.8m for the fiscal first quarter ended 30 June 2012 – a decrease of 29 per cent compared to €139.3m for the same period last year. The drop is primarily due to a 27 per cent rise in fuel costs, offset by a 4 per cent growth in the average fare and strong ancillary revenues.

Total operating revenues increased by 11 per cent to €1.28bn (2011: €1.15bn), while total operating expenses increased by 17 per cent to €1.15bn (2011: €985.5m).

The airline carried 22.5 million passengers during the first quarter of 2012, an increase of 6 per cent compared to 21.3 million for the same period last year.

Despite the challenging environment, Ryanair grew its traffic in regions across Europe. Compared to the first quarter of 2011, total revenue per passenger increased by 5 per cent, while load factor declined by 1 point to 82 per cent.

Operating profit was €132m (2011: €169.9m), while net margin was down 4 points to 8 per cent, compared to June 2011.

Michael O'Leary, CEO of Ryanair, said:

As we previously guided, significantly higher fuel costs caused Q1 profits to fall by €40m (from €139m last year’s) to €99m. Our 6 per cent traffic growth combined with a 4 per cent rise in ave. fares led to an 11 per cent increase in revenues. Ancillary sales grew by 15 per cent to €286m (outpacing traffic growth) accounting for 22 per cent of total revenues. Operating unit costs rose 10 per cent as fuel increased 27 per cent (by €117m) to €544m.

First-quarter yield increases were dampened by the EU wide recession, austerity measures, and heavily discounted fares at our new base launches in Cyprus, Denmark, Hungary, Poland, Provincial UK and Spain.  Excluding fuel, first-quarter unit costs rose by 3 per cent, as we rigorously controlled costs, despite a 2 per cent rise in flight crew pay, higher charges at certain airports, and the impact on costs of stronger sterling against the euro.

The airline expects full year traffic to grow 4 per cent (7 per cent in first-half, and 1 per cent in second-half due to winter capacity cuts).