IRISH no-frills airline Ryanair yesterday reported its first fall in annual profits since floating on the stock market in 1997, as increasingly tough competition and higher capacity dented full-year figures.
Despite a weaker fourth quarter, Europe's biggest low-cost carrier unveiled pre-tax profits of (euros)228.5m ((pounds) 152.1m), down 14% compared with (euros)264.5m for the same period a year earlier.
Michael O'Leary, the Ryanair chief executive known in the City for his unconventional manner, warned that the fierce trading environment was poised to get even rougher this winter. He said: ''It's a bloodbath out there.'' Dublin-based Ryanair carried a record 47% more passengers during the 12 months to March 31, taking the number of people flying on its routes to 23 million. During the year, the airline opened two new bases at Rome Ciampino and Barcelona Girona and launched 73 new routes, boosting its network to 150 routes.
Yields - the key industry measure of average revenue per passenger carried - dropped 14% over the year and 22% over the final quarter to March. Summer bookings show some improvement, with yields down by only between 5% and 10%.
O'Leary said: ''Ryanair continues to be the lowest-cost airline in Europe and we will continue to exploit this enormous cost leadership to grow profitably while many of our competitors lose money and/or go out of business.''
The company downplayed the cost of higher oil prices and claimed the growth of low fare air travel would not be hampered by further rises. However, O'Leary predicted fuel costs would only hasten the demise of the current wave of loss-making start-ups and higher-fare flag
carriers.
He said: ''The recent decision by British Airways, Air France and KLM, among others to impose fuel surcharges is typical of the anti-consumer mindset of high-fares airlines.''
Ryanair has pledged to leave ticket prices free of fuel surcharges and believes it can absorb higher oil prices to keep fares low through cost savings in other areas.
O'Leary said Ryanair had significantly lowered fares while maintaining a ''world leading'', after-tax , profit margin of more than 20%. He added: ''These results demonstrate yet again what a superb job the 2300 people of Ryanair do in both good times and bad.''
In the longer term, O'Leary said Ryanair intended to lower prices further as it seeks to grow passenger numbers to 50 million a year, in doing so making the group Europe's largest international scheduled airline.
Ryanair said regulatory
battles such as its recent dispute with the European Commission over subsidies from the publicly-owned airport at Charleroi in Brussels would prove to be ''temporary
obstacles''.
The airline said it was confident it would win its appeals on Charleroi and another dispute involving Strasbourg airport. Shares in Ryanair closed unchanged at (euros)4.34 on the Dublin stock exchange last night.
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