Ryanair warns profits set to fall

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Ryanair has warned that its profits should fall in 2012-13 because of high fuel prices and the eurozone crisis but insisted it still wants to place another large order for aircraft.

Michael O’Leary, Ryanair’s chief executive, said on Monday he could justify buying up to 300 new aircraft because some European airlines were going bust and the continent’s large flag carriers were scaling back their short-haul routes.

But if an aircraft order is not finalised by 2014-15, he held out the prospect of Ryanair issuing another special dividend.

At its results for 2011-12, Ryanair, Europe’s largest low-cost carrier by revenue, proposed a second special dividend worth €483m, after a maiden payment of €500m in 2010.

Mr O’Leary said: “We are bereft of ideas so we just give the money back to the people who own the company.”

He went on to insist that Ryanair could still secure a cheap aircraft order even though Airbus and Boeing are reporting strong demand from airlines for their new generation of more fuel-efficient narrow-body jets. He said Ryanair was also talking to Comac, the Chinese aircraft maker, about a potential order.

Ryanair reported revenue of €4.4bn for the year to March 31, up 21 per cent compared to 2010-11.

Net profit rose 50 per cent to €560.4m, with the performance flattered by one-off items including the sale of four aircraft engines. Basic earnings per share rose from €0.25 one year ago to €0.38 in 2011-12.

Analysts expressed disappointment with Ryanair’s guidance for net profit before exceptionals to be between €400m and €440m in 2012-13, compared to €502.6m in 2011-12.

The airline’s shares closed down 0.25 per cent, at €4.04 but some analysts highlighted Ryanair’s practice of issuing conservative guidance that is subsequently upgraded.

Ryanair expects its pre-tax profit in 2012-13 to be dented by a €320m increase in its fuel bill and it plans to respond by repeating what it did last winter, when 80 aircraft were grounded.

Mr O’Leary said earnings would also be reduced by recession in the eurozone. Ryanair’s average fares rose 16 per cent in 2011-12 but the airline only expects a 3 per cent increase in 2012-13.

Andrew Light, analyst at Citi, described Ryanair’s outlook as “poor”, saying the lower than expected profit guidance appeared predicated on “lower fares and eurozone recession”.

Mr O’Leary predicted a break-up of Aer Lingus, the Irish flag carrier that Ryanair has been prevented from buying by regulators.

Etihad, the fast-growing Middle East airline with a 3 per cent stake in Aer Lingus, has not approached Ryanair about buying its 29 per cent shareholding in the Irish flag carrier.

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