Budget airline Ryanair warned today that it could make a loss this year as a result of spiralling fuel costs.
The Dublin-based operator reported an 85 per cent fall in first quarter post-tax profits to 21 million euros (£16.6 million) and said it expected to record a full-year result of between break-even and a loss of 60 million euros (£47.3 million).
Chief executive Michael O'Leary said the company's fuel bill rose 93 per cent to 367 million euros (£289.6 million) in the first quarter, representing almost 50 per cent of its operating costs, compared with 36 per cent last year.
Despite the oil price pressure, Mr O'Leary said the airline remained committed to its guarantee of no fuel surcharges.
He added: "We will continue to absorb higher oil costs, even if it means short-term losses, while we continue to deliver Europe's guaranteed lowest fares to our 58 million passengers."
Oil prices hit 147 US dollars a barrel this month, but Ryanair recently took advantage of a fall in the price to fix 90 per cent of its fuel requirement at 129 US dollars a barrel for September and 80 per cent of the October to December period at 124 dollars. However, it is unhedged for the fourth quarter to the end of March.
Ryanair said its forecast of a possible loss for the full year was based on fourth-quarter oil prices of 130 US dollars and a 5 per cent decline in average fares.
It said it would look to maintain "aggressive pricing" in order to maintain high plane usage.
Mr O'Leary added: "We now believe that our average fares for the year may fall by as much as 5 per cent if European airfares plunge this winter.
"Ryanair will lead this downward pricing at a time when most of our competitors are hoping to raise fares and fuel surcharges."
The airline said this month that it planned to cut its number of weekly flights from more than 1,850 to just under 1,600 this winter. That includes a 14 per cent reduction in the number of weekly flights at Stansted Airport in Essex.Reuse content