Ryanair delivers record half-year profits

Ryanair has posted record half-year profits of €329m.

Europe’s largest low fares airline stated that its traffic grew by 23 percent to 22.1m passengers, yields increased by nine percent as total revenues rose by 33 percent to €1.256bn.

Unit costs increased by 7.5 percent as fuel costs rose by 42 percent to €337m. Despite these significantly higher fuel costs, Ryanair’s after tax margin for the half year rose by one point to 26 percent as half year net profits increased by 39 percent to €329m. Ancillary revenues grew by 27 percent.

Ryanair’s chief executive officer Michael O’Leary, said the airline yet again delivered record half-year profits despite intense competition and very high fuel prices.

“The Ryanair lowest fare model has repeatedly proven that it can generate increased profitability and significant passenger growth during difficult trading conditions while many of our competitors are struggling to deliver profits or are losing money,” he said.

“We remain cautious in our outlook for H2 as we roll out substantial capacity expansion and suffer significantly higher oil prices than the comparable period last year.”

Regarding ‘Cash Offer’ for Aer Lingus of €2.80 per share, which valued Aer Lingus at approximately €1.48bn, O’Leary aid, “We have acquired a 19.2 percent stake in Aer Lingus at a cost of €254m. We believe there are significant opportunities, by combining the purchasing power of Ryanair and Aer Lingus, to substantially reduce its operating costs, increase efficiencies, and pass these savings on in the form of lower fares to Aer Lingus’ consumers.”

He added that there are plans to retain the Aer Lingus brand and the Heathrow slots, and up-grade their dated longhaul product and “(we) are committed to reducing their shorthaul fares by 2.5 percent per year for a minimum of four years.”

The EU Competition Authority is currently reviewing the proposed acquisition and the final outcome of  regulatory review will not be known until late December, 2006.

“If our offer is not accepted by a majority of Aer Lingus shareholders, we will continue to be a significant minority shareholder, and will exercise whatever influence we can to encourage Aer Lingus to reduce costs and offer lower fares which is, we believe, its best strategy for the future.”