Ryanair half-year profits up 10%

No-frills airline Ryanair raised its guidance for the year as profit rose 10 per cent in the first half of its financial year and traffic increased.

The airline said it would raise its profit guidance for the year from between €400 million and €440 million to between €590 million and €520 million after a strong performance in the six months to September.

Revenues were 15 per cent higher for the six-month period at €3.11 billion, with profit after tax rising to €596 million compared with €544 million in the six months to September 2011.

The company carried 7 per cent more passengers, bringing it to a total of 48 million, while its average fare was 6 per cent higher.

The high price of oil hit the airline, with fuel rising by 24 per cent and leading to an 8 per cent rise in unit costs. When the impact of fuel prices was discounted, the rise was only 2 per cent. But chief executive Michael O'Leary said the fuel bill was lower than forecast as the company successful implemented a fuel savings programme.

He described the rise in profit and passengers as "another robust result", driven by strong post-Olympics bookings.

Ancillary revenue was up 12 per cent to about €12 per passenger in the period.

The company predicted market conditions in Europe would remain tough, with austerity measures, fuel costs and government charges weighing the demand for air travel.

"Further airline failures and consolidations are inevitable given the fragmentation among European airlines and the existence of so many high cost, high fare airlines with poor punctuality records," the company said.

Ryanair is currently attempting to take over rival airline Aer Lingus. The bid is being evaluated by European competition authorities, but Aer Lingus has urged shareholders to reject the offer, saying it undervalues the business. The Irish Exporters' Association has also voiced its objection to the proposed deal, warning that it could put the air cargo link with the US at risk.

This morning, Mr O'Leary said the company was "determined to explore all commercial options" to address any competition concerns the EU may have to secure approval for the merger.

It had submitted an "unprecedented" remedies package, Mr O'Leary said, which would commit multiple up-front buyers to opening new bases in Ireland.

"The recent BA/BMI (Phase 1) merger approval and the subsequent Aegean/Olympic merger proposal vindicate Ryanair's view that its offer for Aer Lingus along with the radical remedies package will - if fairly assessed - secure EU competition approval," he said.

Looking ahead to the rest of the fiscal year, Ryanair said its traffic is expected to rise by 4 per cent to more than 79 million, but the airline predicted flatter traffic in the second half of the year as high oil prices and seasonal demand restrictions caused it to ground up to 80 aircraft.

"Recession, competition and very low fare competition at new bases will constrain profitability during H2, although we now expect full year yields to rise by up to 4 per cent," the company said.

The company is targeting growth over the next 10 years, predicting it will carry up to 120 million passengers per annum within a decade.