Ryanair will today announce its first routes from London's Stansted airport into Germany, as part of an expansion which will see the low-cost airline introduce eight new routes from the UK to continental destinations this year.
Speaking after the publication of the airline's third-quarter results, Ryanair chief executive Mr Michael O'Leary declined to reveal the new routes into Germany, France and Italy, but said that in each case Ryanair will be competing head-on with the major "flag-carrier" airline.
The company is also planning to enhance its cash reserves to take advantage of the downturn in the airline industry that Mr O'Leary expects within the next year or two. Ryanair ended its third quarter with cash balances of £113 million (€143.58 million) after having paid deposits of almost £48 million to Boeing for new aircraft.
"We are building up a significant war chest if a downturn comes in the aviation industry - and most experts predict it will come in the next year or two. The key thing is to go into a downturn with a very strong balance sheet, zero debt, lots of cash, because that's where you get the aircraft at distressed prices." He said that the current 25 aircraft on Ryanair's order book represented the airline's minimum growth and that the group would be on the lookout to buy aircraft if a sector recession came.
He was emphatic, however, that Ryanair will buy aircraft and not other airlines in such a downturn. "In downturns, aircraft values fall and you can make a lot of money picking up aircraft cheaply," he said.
Mr O'Leary added that Ryanair's route expansion will come from routes out of the UK and that, at best, services from Dublin will be maintained at their current level as long as airport charges at Dublin do not rise.
"In two months' time, the duty-free situation will be resolved. If it's extended, then there would be no justification for an increase in aircraft charges in Dublin," he said.
The Ryanair results for the third quarter were marginally ahead of analysts' forecasts, with pre-tax profits rising from £8.1 million to £9 million (€11.4 million), while profits for the nine months to the end of December rose from £32 million to £34.4 million (€437 million). Turnover in the third quarter rose from £44.4 million to £52.5 million (€66.7 million), while turnover for the nine months increased from £141.3 million to £182.9 million (€232.4 million).
In his statement on the results, Mr O'Leary said that he was "comfortable with the general range of analysts' forecasts for our year-end out-turn". Ryanair's own broker, Davy, is forecasting full-year profits of €71.9 million (£56.6 million).
Mr O'Leary contrasted Ryanair's results with the fall in fourth-quarter profits announced yesterday by British Airways and added that the third-quarter rise in profits at Ryanair came in the winter period. "Our six new European routes performed strongly during their first winter period and all have been profitable since their launch," he said.
He also emphasised that the strong third-quarter performance covered a period when British Airway's Go low-cost airline introduced services on the London-Rimini and London-Venice routes operated by Ryanair. Its entry has resulted in no loss of traffic to Ryanair, he said, adding that the impact of Ryanair and Go on these routes "has resulted in a cannibalisation of BA's market share".
"We believe that it is British Airways and not other low-cost carriers who will suffer from the adverse impact of Go's development," he stated. He added that, during 1998, Ryanair carried more passengers than all the other low-cost carriers combined - Go, easyJet, Debonair and AB.
