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Ryanair unstoppable
Published: 09:52 GMT, Mon 3 Nov 2003
By Rodney Hobson, Larger Companies Correspondent
Low fare airline Ryanair continues to confound the sceptics and as long as chief executive Michael O'Leary can turn any adversity into positive publicity it will thrive.
Results for the half year to September have beaten expectations with a 16% rise in pre-tax profits to €176 million (£120 million). Traffic was up 45%, which does draw attention to the one concern: O’Leary admits that fares are being driven lower.
In the latest period Ryanair fares were 12% lower, so total revenue, up 28%, failed to keep pace with the 32% rise in costs. Still, 11.3 million passengers were carried compared with 7.8 million in the same period last year.
O’Leary said the record profits had been achieved in ‘adverse market conditions across Europe‘. His low fares model ‘delivers extraordinary growth and exceptional profitability in an industry more often characterised by losses’.
The war in Iraq, high oil prices and the sluggish European economy were all overcome with panache. Ryanair has taken delivery of 18 new Boeing aircraft, acquired, restructured and relaunched Buzz, opened two new bases and launched over 50 new routes.
Some routes, mainly from Stansted and Stockholm, have under performed but this will be dealt with in decisive Ryanair fashion. We can expect those that fail to come up to scratch to be ditched early next year. Ryanair now has so many destinations, and is talking to 50 more airports about setting up new routes, that it can mix and match to maximise passenger numbers.
Citywire Verdict
Ryanair continues to set the agenda for the airline industry in Europe and we can expect further rapid progress. There is no reason to fear that the airline will over extend itself as it copes with expansion without any signs of strain so far.
Chief executive Michael O’Leary has put quite a few backs up but he fights his corner and is likely to succeed in beating down the bureaucrats in Brussels, where his subsidy at Charleroi is still under investigation, and in Ireland, which is exasperating him by its slow progress towards freer competition.
Life is tough in the industry but if the weak go to the wall they will not include Ryanair. Progress may not be so spectacular in the rest of the financial year, but then again O’Leary has managed to beat forecasts often enough to suggest that he can do it again.
©2003 Citywire
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London "Evening Standard"
Ryanair set to overtake BA
Robert Lea, Evening Standard
3 November 2003
UDGET airline Ryanair will be flying more passengers around the UK and Europe than British Airways by Christmas, its chief executive claimed today.
'Of course we will be overtaking BA,' said Michael O'Leary. 'We have already overtaken them in the UK and as for Europe - that depends on the rate at which BA remains in decline.'
Ryanair today reported 45% growth in passengers to 11.3m in the six months to the end of September and latest figures show that it is within a couple of thousand passengers a day of overhauling BA.
However, Ryanair's passenger growth is overshadowed by ever-thinning profit margins. In addition, the rate of profits growth has stalled.
At the interim stage, including the £4.1m exceptional costs of taking over Buzz, rising route costs and the interest charges on its new Boeing aircraft, pre-tax profits rose 11% to e187m (£128m).
O'Leary said the carrier was continuing to grow despite what he believes is 'a concerted campaign of dirty tricks' by traditional full-service airlines.
This is culminating in a European Commission investigation - expected to end this month - into taxpayer-fuelled incentives paid to get Ryanair to fly to Charleroi, near Brussels.
But it has also included challenges to Ryanair's arrangements at other publicly-owned airports including Strasbourg and Pau in France, Niederhein in Germany, Aarhus in Denmark and Haugesund in Norway.
Meanwhile, holidays and weekend breaks for owners of second homes in France were under threat, after the airline warned some of its routes will be cut because they are not making money.
'Some of our new routes from Stansted this summer to the low countries and one or two French destinations have under-performed,' said O'Leary.
'Unless there is significant improvement in load factors [passenger numbers] through the winter, then we will replace a small number of these with alternative destinations and services.'
O'Leary refused to name the airports but those in France include Brest, Clermont-Ferrand and St Etienne.
Low countries services facing the axe may include Ostend-Bruges and Maastricht. 'The simple fact is that some of the airports we are flying to are not just giving the service that we want or that our passengers expect,' added O'Leary.
The arrival of budget airlines resulted in a huge growth in the number of people buying holiday homes. Thousands have bought properties as advertisements for homes in the south-west of France promise: 'Ryanair, 40 minutes'.
In recent months Ryanair has opened up new routes between Stansted and Baden-Baden in Germany, and between Bournemouth and Girona. Last month its new routes included Stansted to Tampere in Finland, Prestwick to Gothenburg and from Birmingham to both Murcia and Girona.
©2003 Associated Newspapers Ltd. All rights
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