Ryanair blames drop in profit on fall in air fares and weaker sterling

International credit rating agencies are likely to give their first assessment of Ryanair by the middle of the year, just months before it begins taking delivery of the first of 175 new Boeing aircraft in September.

The company yesterday said it lost €35.2 million in the three months ended December 31st, which was in line with expectations. In November Ryanair said it expected profits for its current financial year, which ends on March 31st, to be between €500 million and €520 million, rather than a higher range of €570-€600 million predicted in September.

Chief executive Michael O’Leary blamed a 9 per cent fall in air fares and weaker sterling for the loss, but pointed out the airline responded to these factors in September with promotions across all its markets which boosted passenger numbers by 6 per cent to 18.3 million over the same three-month period in 2012.

The airline is considering a number of options to fund its planned purchase of 175 Boeing craft, with an estimated worth of €12 billion, beginning next September, and is seeking a rating from agencies such as Fitch, Moody's and S&P that will make it easier to tap capital markets should it decide to do so.

Outcome
Chief financial officer Howard Millar said yesterday that the process was ongoing and the airline "expects to have an outcome from that in the early part of the summer", but declined to comment further.

While delivery of the craft begins in September, the bulk of them will not arrive until the following two financial years, which will end on March 31st 2016 and 2017. The company said recently it would fund their purchase through a mix of its own resources and debt.

Ryanair plans to expand its fleet to 400 craft and passenger numbers to 110 million, from their current level of around 80 million, over the next five years.

Recent customer service improvements, including a revamped and easier-to-use website and the introduction of allocated seating, are intended to support this.

Mr Millar said the changes, which Mr O'Leary flagged in September, were already having a positive impact. Advance bookings for the first quarter of its financial year – which ends on June 30th – are up on the same period in 2013, according to a statement yesterday.

Ticket prices
Mr Millar noted yesterday that Ryanair was seeing indications that the fall in ticket prices may be bottoming out.

Its statement said the trend in advance bookings extended to new routes and bases, such as Brussels (Zaventem), which opens this month, Athens, Thessaloniki and Lisbon, which launch in April. In December it opened four new Italian bases.

Ryanair’s share price jumped 6 per cent to €6.731 yesterday, adding more than €600 million to the company’s value.