Ryanair to keep 80 aircraft grounded this winter

This story is sourced from Pro
See more Pro news »

Ryanair is likely to again keep around 80 aircraft grounded this winter rather than operate them at a loss over the season, chief executive Michael O'Leary has said.

The Irish carrier today (21 May) announced annual profits up by 25%, revenues up by 19% and passenger numbers up by 5% for the year to March 2012. The increased revenues came despite the airline grounding aircraft over the winter.

"We kept 80 aircraft on the ground this winter and we expect to do the same again [this winter]," O'Leary said during a results press conference in London today.

He describes the grounding as a practical response to high oil prices during the low-season winter months. "While I don't think that it's a good long-term strategy, in the short term it makes sense," he says, adding that 60% of Ryanair's winter passengers pay one-way fares of less than €10 ($12.70).

Ryanair expects to grow passenger numbers 5% for the year to March 2013, led by growth of 7% in the first half and with capacity growth again capped over the winter at around 3%. While the airline sees yields failing to grow fast enough to offset higher fuel costs, O'Leary believes the airline will benefit from the struggles of rival carriers in the tough conditions.

"If you see the consolidation across Europe, I think there will continue to be very significant cut backs in short-haul flying from flag carriers in Europe. I think there will be more airline closures," he says.

"The lack of economic growth is very good for Ryanair as it accelerates the switch of passengers onto Ryanair. The most obvious example of that is with Malev at Budapest. Now we have five aircraft based there this summer, where we had nothing in the business plan in the winter," he says.

While O'Leary says the airline will look at opportunities outside European Union countries - for example citing talks over potential Israeli markets - most of its growth will remains on routes within the EU. "Central Europe will be a strong growth area for us in the next two years," he adds.

But one country it will not be growing in is Spain, with airport charges set to rise across the airline's eight bases in the country. The highest rises will be at Madrid and Barcelona, O'Leary says, describing the move as a "chronically suicidal strategy" for a country struggling economically and so reliant on tourism.

While O'Leary reiterates his view that Ryanair will benefit from passengers trading down from rival carriers, he nonetheless acknowledges looming cuts to Spanish capacity. "We will be reducing capacity in Spain, as will all other airlines," the chief executive says.