Snow and strikes push Ryanair into the red
Tuesday 01 February 2011
Ryanair blamed the combination of air traffic control strikes and the winter weather as it posted a €10.3m (£8.9m) loss for the three months to December on Monday.
The disruptions led to the cancellation of more than 3,000 flights in the quarter, the low-cost carrier said, compared with more than 1,400 in the previous year. Terming the loss "disappointing" as Ryanair was "on track to break even" over the third quarter, chief executive Michael O'Leary said the airline was still confident of delivering full-year results at the upper end of expectations, owing to rising passenger numbers and average prices.
He also played down the carrier's exposure to the beleaguered Irish economy. "We are surprised that the widespread negative commentary on the Irish economy has been allowed to cloud some analysis of Ryanair's future growth and profitability," he said, pointing out that the troubled nation's share of Ryanair's originating traffic had declined from more than 20 per cent to less than 10 per cent in recent years.
The airline also benefited from its fuel-hedging strategy, which helped to offset the impact of rising oil prices. The carrier said it was 90 per cent hedged for the fourth quarter at a price of $750 per tonne, compared to spot prices of $890 per tonne.
On the strikes and winter weather cancellations, Mr O'Leary said the disruptions had brought "renewed focus on the unfair and discriminating" EU regulations, under which airlines are required to reimburse certain expenses of disrupted passengers.
"Urgent reform of these regulations is vital," he argued. "It is inequitable to force airlines to pay for right to care or compensation in circumstances where widespread flight cancellations by ATC strikes, or by airports' failure to keep their runways open during periods of adverse weather."
Analysts welcomed the results, with Panmure Gordon anticipating strong cash generation, "possibly around €1bn per annum once aircraft deliveries come to an end".
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