Budget airline Ryanair is blaming high fuel prices for a 47% fall in half-year profits.
The Irish-based operator was quick to point-out that traffic grew by more than 19% in the same period and that average fares were down while total revenue was up 16% to €1.8billion.
The results relate to a period ending in September 2008 and travel industry analysts indicate that passenger numbers for most airlines have dipped significantly in the Autumn period.
Ryanair is now the biggest single carrier operating from Liverpool John Lennon Airport and is thought to rely for a large slice of its trade on city shortbreak holiday travel.
This type of mini-break is recognised in the travel industry as a discretionary purchase that is highly vulneable to the lack of consumer confidence in the current recession.
But Ryanair Chief Executive Michael O'LEary remains bullish about the future prospects of his the airline industry phenomeno that is Ryainair.
O'Leary said "Achieving a half-year net profit of €215m in very difficult trading conditions with record oil prices is a testimony to the strength of the Ryanair lowest fare model, which delivered 19% traffic growth, and a 4% yield decline, due to the absence of Easter and falling baggage penetration rates.
"Ancillary revenues which grew by 28% to €322m account for almost 18% of revenues versus 16% last year. Unit costs including fuel rose by 21%."
He said that Ryair was using its buying power and market position to cusion its exposure to fuel price variations.
O'Leary added: "Spot fuel prices have fallen recently as the worldwide recession has led to a collapse in consumer confidence and consumption.
"High oil prices and the global recession has, as we predicted, caused a string of airline bankruptcies and/or consolidations in Europe.
"Recent failures include Alitalia, Excel Airways, Futura, LTE, Sterling and Zoom.
"Many more loss making European airlines will go bust this winter because of unsustainable losses and insufficient cash reserves.
"Airline consolidation will continue as flag carriers merge into three high fare, fuel surcharging groups, led by Air France, BA, and Lufthansa.
"Ryanair will continue to compete with these high fare mega carriers most of whom stubbornly refuse to reduce their fuel surcharges to reflect the recent 50% fall in oil prices.
"Our new bases at Birmingham, Bologna, Bournemouth, Edinburgh and Reus performed well as consumers flock to Ryanair's guaranteed lowest fares and no fuel surcharges.
"We have announced three new Italian bases for March'09 at Alghero and Cagliari in Sardinia and "Trapani in Sicily to capitalise on Alitalia's cutbacks as more airports realise that only Ryanair can deliver rapid sustainable traffic growth.
"Advance bookings this winter are slightly ahead of target although this is due to repeated price promotions resulting in lower than expected fares.
"We have implemented our plans to ground 15 Stansted aircraft and 4 Dublin aircraft this winter following further unjustified increases in the already high passenger charges at these airports. Despite these reductions, we expect Ryanair's traffic will still grow by 9% this winter, and by 14% to 58m for the full year. The economic recession has caused consumer confidence to collapse.
"Ryanair's fares are now even more attractive as consumers become more price sensitive and trade down from high fare, fuel surcharging airlines, like Air France, BA and Lufthansa. As more airlines go bust, and the wave of European consolidation continues, the strongest survivors will be those airlines -like Ryanair- who are well financed, have a strong balance sheet, and the lowest cost base.
"The outlook for the remainder of this fiscal year (2008/09) is dependant upon fares and fuel prices. The recession will continue to drive down oil prices and fares this winter.
"We will continue to respond with lower fares and aggressive price promotions to keep Europe flying and to maintain our market leading load factors.
"Although we have limited visibility, we now believe that average fares in the second half will fall by between -15% to -20% leading to losses in the 3rd and 4th quarters. Our full year average fare could fall by almost -12% although these lower fares will be largely offset by lower fuel costs (currently $73 pbl in Q4). As a result our previous guidance remains unchanged and we remain confident that we will break even for the full year.
"We expect continuing bankruptcies and consolidations to create even more opportunities for Ryanair to grow."
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