RYANAIR has seen first quarter profits slump by more than a fifth as the budget carrier suffered from rising fuel costs, the timing of Easter and strike action by French air traffic controllers.
The Dublin-based company, which flies around Europe from Prestwick and Edinburgh, has reported a 21% fall in profit after tax to €78 million for the three months ended July 29, compared with the same period in 2012, with average fares falling by 4%.
The profit performance, which was in line with previous guidance, came in spite of first quarter revenue rising by 5% to €1.34 billion.
Ancillary revenues grew by 25% to €357m as the low-cost carrier introduced reserved seating, priority boarding and higher administration and credit card fees.
The growth means revenue from ancillary sources accounted for 27% of the company's overall revenues for the quarter.
Ryanair said there had been a 3% increase in passenger numbers for the quarter to 23.2m as it confirmed its seven new bases – Eindhoven and Maastricht in The Netherlands, Krakow in Poland, Zadar in Croatia, Chania in Greece and Marrakesh and Fez in Morocco – were performing well.
It revealed plans to continue adding routes and introducing new bases later this year in markets where it said competitors, including Air Berlin, Alitalia and Iberia, are cutting back.
However, it said a 6% hike in the price of fuel had been the driving factor as unit costs increased by 4%. Other factors putting upward pressure on costs included a 2% rise in flight crew pay and air traffic control costs imposed by Eurocontrol, Spanish airports and Italian air traffic control.
Looking ahead, Ryanair said it expects quarter two yields to increase, in spite of the tough comparison presented by the Olympics in London last summer, and weaker summer bookings caused by the heatwave across northern Europe.
It maintained full-year profit after tax guidance in the region of €570m to €600m, noting that factors like recession, austerity measures and taxation on air travel are continuing to impact on air travel demand and yields.
Analyst Robin Byde at Cantor Fitzgerald said net profits at Ryanair were in line with consensus as the likely impact of rising fuel costs, industrial action by air traffic controllers and the timing of Easter had been "well flagged".
Noting its recommendation to buy, the analyst said Ryanair's stock "is still good value", adding: "These are robust earnings in a tough trading environment. Ryanair's comments on weaker yields will be watched closely but is unlikely, in our view, to be material (given reports of rising yields from other carriers)."
Meanwhile, Ryanair chief executive Michael O'Leary resumed his attack on the UK Competition Commission, which has been investigating its 29.8% stake in fellow Irish airline Aer Lingus.
In its interim findings last month, the Commission said the stake had "created a relevant merger situation" that resulted or may be expected to result in a substantial lessening of competition on routes run by the two airlines between Britain and Ireland.
It announced a series of remedies, including a full or partial sale of Ryanair's stake, to address those concerns, on which it is presently seeking views.
Mr O'Leary rubbished the Commission's assessment and also disputed concerns its concern the stake may block attempts by other airlines to acquire or merge with Aer Lingus.
He expects the watchdog to attempt to force Ryanair to sell most or all of its stake, in spite his claims competition between the two carriers has intensified, not reduced, and said it would "strenuously appeal any such ruling".
Shares closed down 0.22 cents at €6.95.
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