Ryanair profits soar 68%

Ryanair today announced the biggest quarterly profits increase in the history of the company.

The opening of the year also saw the no-frills Irish carrier fly more than a million passengers for the first time in three successive months at a time when most airlines were still attempting to recover from the effects of September 11 and the global economic downturn.

Billing itself Europe's largest low-fares airline, Ryanair - which yesterday reported a big increase in its July passenger figures - said the first quarter's 38 per cent rise in numbers had been largely due to a 7 per cent cut in average fares.

The company said that over the first three months of 2002 profits had gone up by 68 per cent.

Total revenues throughout the period went up by 29 per cent to £122.4 million (194.3 million euros), while operating expenses rose by just 22 per cent to £93.8 million (48.9 million euros).

It meant profits rose significantly ahead of expectations - by 68 per cent to £24.6 million (39 million euros).

Chief executive Michael O'Leary said: "This record increase in Ryanair's quarterly profits is a direct result of the key elements of our unique low fares model.

"Firstly very strong traffic growth in all our new and existing markets, secondly extremely disciplined cost-management, and thirdly using these lower costs to drive down air fares for our customers.

"Our traffic growth during the first quarter was outstanding, with high load factors on all 10 routes to and from our new German base at Frankfurt Hahn, and our eight new routes to and from London Stansted.

"Existing markets have also grown strongly where we were able to allocate bigger aircraft or increase frequencies.

"Average load factors for the quarter rose from 77 per cent to 83 per cent."

Mr O'Leary added: "Despite this strong growth Ryanair continues to deliver impressive cost discipline. Operating expenses increased at a considerably lower rate, 22 per cent, than revenues, 29 per cent.

"The fact that marketing and distribution costs declined by 11 per cent during a quarter when we were promoting our new German base and over 20 new routes highlights the strength of Ryanair's unique low fares formula in continental Europe.

"Despite the protestations of Lufthansa, who continue to predict that low fares won't work in Germany, Ryanair enjoys load factors of over 80 per cent on our 10 routes to and from Frankfurt Hahn.

"We will continue to expand in this market where Ryanair is now Germany's largest low fares airline."

Referring to the current state of airlines worldwide, the Ryanair boss said: "There is no doubt that the tumultuous events in the airline industry over the past 12 months have created huge new growth opportunities.

"Ryanair leads the low fares market in Europe by some considerable distance, as our average fares are over 50 per cent lower than those of easyJet/Go.

"Our strong organic growth continues and we enjoy a surplus of new route and new base opportunities.

"We expect to open at least one new base in Europe each year for the next three or four years, as we grow at a disciplined and controlled rate to the benefit of our customers, our shareholders and our staff.

"In view of these increased opportunities, Ryanair has agreed with Boeing to convert three of our rolling 50 option aircraft into firm deliveries during spring 2003, making a total of 13 new aircraft to be delivered in advance of summer 2003.

"These additional firm orders will enable Ryanair to grow at the slightly faster rate of 30 per cent for the next two years to just under 20 million passengers in 2003-04.

"With these new deliveries, Ryanair will start to retire our older Boeing 737-200 aircraft one year earlier than planned in 2003, and the balance will be retired over a four-year period to 2006, at which date Ryanair will have the youngest fleet of aircraft in Europe."

Mr O'Leary sounded one note of caution, though, saying: "Whilst we have enjoyed a very strong first quarter, much of this exceptional profit growth is due to the impact of the launch costs of many new routes in the corresponding first quarter last year, whereas this year most of this launch activity was expended in the preceding quarter.

"We will not repeat a 68 per cent growth in net profits in the second quarter, and going forward we expect to see profit growth running in line with previous guidance for the remainder of the year.

"It is my policy, as always, to advise investors and analysts to remain sensible in their outlook for Ryanair as we ourselves will continue to be."