Profitable Ryanair expects more European airline failures

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Irish budget carrier Ryanair is expecting more European airlines to collapse in 2012 as a result of rising fuel prices and the broader economic situation.

The carrier made its claim as it posted a 25% increase in full-year post-tax profits, to €503 million ($639 million), after revenues rose by 19%. Passenger numbers were up 5%.

But it expects that its profit this year will fall to around €400-440 million.

Higher fuel prices meant the airline's fuel costs increased by more than €360 million. But it says that, excluding fuel, its adjusted unit costs stayed "flat" during the year.

Ryanair has responded to the collapse of Hungary's Malev and Spain's Spanair with new services in each country, and says it expects "more European failures" this year.

The carrier says fuel costs contributed to the closure of Malev and Spanair. It says its own fuel purchase is 90% hedged for 2012-13 at about $101 per barrel.

While this is a 22% increase on the previous year, it says this is still "significantly lower" than current prices. The airline forecasts a €320 million rise in its fuel bill for this year.

Ryanair also says that the oil prices make it "more logical" for the carrier to ground aircraft - up to 80, it says - during the winter rather than suffer losses through low yields.

But it says it expects passenger numbers for the year to rise by 5% to 79 million. The first half will see a 7% rise in passengers with a 3% rise in the second half.