Soaring fuel costs eat into Ryanair's profits

Ryanair fell short of market expectations with its quarterly profits yesterday, as soaring fuel costs offset rising passengers numbers and revenues.

The Irish budget carrier said adjusted profits after tax were up by just 1 per cent at €139m (£123m) in the three months to the end of June, against expectations of a jump to more than €150m. The slim gains came despite an 18 per cent rise in passenger numbers to 21.3 million, and a near 30 per cent rise in revenues to €1.16bn, against €899m in the same period last year, when the airline industry was hit by the Icelandic ash cloud.

The culprit was the high price of jet fuel, with Ryanair, whose shares fell 2 per cent yesterday, saying that its costs were up by nearly 50 per cent to €427m. In contrast, easyJet sent its shares soaring 17 per cent last week after saying it expected annual pre-tax profits to land between £200m and £230m, against hopes of about £184m.

But Ryanair's chief executive Michael O'Leary said the carrier, which has hedged 90 per cent of its fuel requirements for the year at about $86 per barrel, well below market prices, would gain as rivals are forced to "further increase their fuel surcharges and fares". He said: "It will also drive further consolidation and more airlines will exit the industry. This will generate growth opportunities for Ryanair because we operate the most fuel-efficient aircraft and have the lowest operating costs."

Alongside its results, Ryanair said it would sue BAA for "overcharging airlines" at Stansted, accusing the airport operator, which was last week told by the Competition Commission to sell Stansted and one of its Scottish airports, of "generating excess monopoly profits".

"We intend shortly to launch legal proceedings against BAA Stansted, seeking a recovery of substantial overcharges which Ryanair believes it and other Stansted airlines have suffered at the BAA Stansted monopoly's hands in recent years," it said.

But BAA, which may seek a judicial review of the Commission's decision, said its costs and revenues were scrutinised by the Civil Aviation Authority, "which also sets the amount we can charge airlines". It added: "Ryanair has no case for legal action."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Day In a Page

Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee
World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

Max Brooks honours Harlem Hellfighters

The author talks about race, legacy and his Will Smith film option to Tim Walker
Why the league system no longer measures up

League system no longer measures up

Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
Valentine's Day cards: 5 best online card shops

Don't leave it to the petrol station: The best online card shops for Valentine's Day

Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

Devil in blue Costa is a reminder of what Liverpool have lost

The Reds are desperately missing Luis Suarez, says Ian Herbert
Ashley Giles: 'I'll watch England – but not as a fan'

Ashley Giles: 'I'll watch England – but not as a fan'

Former one-day coach says he will ‘observe’ their World Cup games – but ‘won’t be jumping up and down’
Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness