Ryanair reports sharp drop in profits

Ryanair posted a sharp drop in half-year profits, which fell to €215 million, a 47 per cent decrease, largely due to high fuel costs.

In the first six months of 2008, the airline’s fuel costs more than doubled over the same period in 2007, to €788.5 million from €392.7 million.

The carrier’s fuel bill accounted for over 50 per cent of its operating costs, as oil prices doubled from around $63 to $125.

Ryanair also confirmed that it was in the planning stages for long-haul services to the US, but that the launch was still 12-18 months off.

Chief executive of Ryanair, Michael O’Leary, indicated that the transatlantic services would only be feasible if long-haul aircraft could be secured from financially-strapped competitors. “We expect continuing bankruptcies and consolidations to create even more opportunities for Ryanair to grow,” he said.

O’Leary has predicted that his airline’s profits would rebound as economic conditions continue to push oil prices and airfares down over the winter season.

He added: “If oil prices remain at approximately $80 per barrel next year then our earnings will rebound strongly. We have a significant cost advantage over our competitors many of whom have hedged fuel next year at significantly higher levels than current market prices. This will force competitors to further increase air fares and widen the price gap between them and Ryanair’s lowest fares.”

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