News from Ryanair: first quarter round-up

Interesting insight into the long-term Ryanair thinking from deputy CEO and chief financial officer Howard Millar during a first quarter results press conference in London today (27 July).


ryanair 737-800 (Arpingstone).jpgMillar said the carrier had no intention of slowing its growth because of the recession – which it now expects to drive average fares down a fifth in its current financial year – and is on track to reach its long-term aim of doubling traffic and profits from 2007 levels of 40 million passengers and €400 million by 2012.  It expects passenger levels to grow 15% this year to reach 67 million by March 2010. “We have no plans to cutback in growth. We think it’s the ideal time for growth,” he says. (photo: Adrian Pingstone)


But Millar adds: “Beyond 2012, we think that average growth will be more modest. You can’t forever grow at 15%. I think [after 2012] you will see more modest levels of growth, of between 5% to 9%. [Growth of] 15% is not sustainable for ever.”


Among the other key points from Ryanair today:


  • Millar says while the carrier has been talking to Boeing (and that Airbus doesn’t want to talk to the carrier at the moment) about its long-term large aircraft deal -  no deal is done and the carrier is prepared to wait.
  • Ryanair has completed a $1.5 billion aircraft financing for 55 aircraft covering its deliveries until the end of Sep 2010
  • The carrier has extended its fuel hedging position and is now 81% hedged for the full financial year – which it estimates leaves it on track for fuel savings of around €460 million over 2008/09
  • Miller believes any separate long-haul operation, previously promoted by Michael O’Leary, is “several years away”.  He says: “You must have really cheap aircraft and relatively low fuel prices. So far that hasn’t materialised.”
  • Overall the carrier still aims to double its profits for the full year, but its more pessimistic yield expectations – having earlier forecast a 15% to 20% fall in yields for the year it now expects this to be at least a 20% fall – has prompted it put its full-year profit forecast at the lower end of its previous €200-€300 million range.

“We only have a limited horizon, so we have to use our best judgement,” says Millar “But we have taken the view it is going to be a pretty tough winter. We think there are no signs of a recovery anywhere within Europe. There are no signs of green shoots. This winter will be tough for everyone.”


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