Ryanair Warns of Profit Slowdown

Ryanair has posted a 33 percent jump in annual net profits, pushed up by higher ticket prices. However, profit growth is predicted to slow as higher UK interest rates prompt travelers to seek cheaper deals.

Ryanair shares fell more than seven percent as a warning to investors for the year ahead.

Ryanair, Europe’s biggest low fares airline, today (5 June) released record net profits of €401 million, a 33 percent increase over the prior year figure and ?11m ahead of previous guidance.

Ryanair’s traffic grew by 22 percent to 42.5 million, yields rose 7 percent, as revenues grew by 32 percent to €2.24 billion. Unit costs increased by 9 percent mainly due to a 50 percent increase in fuel costs. Despite this significantly higher fuel bill, Ryanair maintained an industry leading after tax margin of 18 percent.

Profits climbed 33 percent to €401 million, up €100 million from last year. Traffic growth ramped up 22 percent to 42.5 million.

The unusual feature of these results was the 7 percent rise in average fares, despite the 22 percent growth in traffic. This increase was largely driven by competitor fare increases and competitor fuel surcharges, as well as our checked baggage fees which are designed to encourage passengers to travel with carry-on luggage only.

Ryanair’s “lowest fare” business model is strongly cash generative. Cash on hand at March 31 2007 amounted to €2.2 billion. At the AGM on September 22, 2006 the shareholders authorized that the directors could repurchase buyback shares, amounting to 5 percent of the company’s issued share capital.