Ryanair shrugs off rising oil prices to lift profits by 21%

Ryanair said yesterday its policy not to impose fuel surcharges on customers despite soaring oil prices had paid off, with the low-cost airline defying its rivals and reporting record first-quarter results.

The company said the fuel surcharges introduced by other European carriers on short-haul journeys had pushed customers towards Ryanair, which has vowed to absorb the rising price of oil. Profits for the three months to the end of June 2005 rose 21 per cent to €64.4m (£44.4m), with revenues up 35 per cent to €494m and passenger numbers up 30 per cent to 8.5 million. The average fare rose 3 per cent to about €40.5.

Michael O'Leary, the chief executive of the company, said: "Ryanair's traffic growth and yields have significantly benefited from our commitment not to impose fuel surcharges on our passengers."

Bookings have been affected by heightened security fears in the wake of the London bombings last month. But Mr O'Leary said that if there are no further attacks, the company does not expect its forward bookings to be materially affected.

Its average load factor, the proportion of available seats that are filled, was stable at 83 per cent during the quarter. Total revenues per passenger rose 4 per cent, thanks to strong ancillary sales of products such as car hire, hotel bookings and travel insurance.

The bloodbath predicted by Ryanair in the European airline business was occurring, Mr O'Leary said. He added that many more airlines would go bust in the winter. EUjet, another Irish-based low-cost carrier, collapsed last week at the height of the busiest and most profitable season for airlines, leaving 5,500 passengers stranded. "We anticipate there will be fewer carriers in the European market as high fuel prices force loss-making carriers out of the industry," he said.

Rising oil prices sent the company's fuel bill up 112 per cent over the quarter to €109.9m. Oil prices hit an all-time high of more than $62 a barrel yesterday, and Ryanair has not hedged its fuel prices for August.

This makes the company continue to be cautious about its outlook, and it has not raised its earlier guidance of profits of €295m for the full year, a 10 per cent rise on the €268m last year. But it has now locked in 90 per cent of its fuel needs for September, at $57 a barrel, and expects its oil price for the year to average $51 a barrel.

Mr O'Leary said the company's cost cutting would offset the rising fuel prices and it was on track to increase traffic by 27 per cent to 35 million passengers this year. Its long-term aims are to carry 70 million passengers by 2012 and to operate 28 bases around Europe.