"Ryanair CEO sees airline 'bloodbath' ahead"

Tuesday, November 2, 2004

Ryanair sees 'bloodbath' ahead
Airline: $50 Brent would add 55 million euros to costs   
By Kabir Chibber
CBS MarketWatch

 
LONDON (CBS.MW) -- Irish low-fare carrier Ryanair said Tuesday it predicted
a "bloodbath" and "airline casualties" over winter, accelerated by record
high oil prices, as it revealed its results for the half year.
 
Shares in Ryanair soared nearly 8 percent in early London trade as it said
it expects passenger yield to fall by less than previously expected in the
second half.

The airline said first-half adjusted pretax profit rose 15 percent to a
record 201.3 million euros ($256 million). Revenue climbed 21 percent to 721
million euros. 

Passenger traffic rose 24 percent to 14.1 million passengers. The carrier
said first-half yields fell 5 percent and margin for the period was down 1
percent to 28 percent. 

"These record traffic and profit figures show just how robust Ryanair's
"lowest fares" model remains even in a very difficult economic environment
characterized by record fuel prices and intense price competition," said
Michael O'Leary, Ryanair's controversial and outspoken chief executive. 

"Furthermore, many of our competitor airlines who were losing money
heroically when fuel was $25 per barrel are doomed the longer it stays at
$50," he added. 

Ryanair remaining unhedged 

O'Leary said Ryanair could absorb much higher oil prices than its
competitors, saying that Brent crude oil staying at $50 a barrel for the
remainder of the fiscal year would add about 55 million euros to its total
budgeted costs, and still offer the lowest air fares.

"We remain by some distance the most profitable airline in Europe," O'Leary
said. Ryanair has been unhedged on oil from November and would remain so
until "forward rates return towards their previous "normal" levels."

Looking ahead, the airline said it remains cautious. It now expects yields
for the third and fourth quarter to decline 5 percent to 10 percent from a
previous guidance of a 10 percent to 20 percent fall, which it said would
partially offset higher fuel prices for the second half of the year.


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