Ryanair reports operating loss

Ryanair has reported a full-year operating loss of €169 million after writing down the value of its Aer Lingus stake and hinted it may consider acquisitions.

The results include a writedown of its 29.9 per cent stake in Aer Lingus by a further €222 million to €93 million, reflecting the fall in the Aer Lingus share price to 59 cent at the end of March. Revenues rose 8 per cent to €2.94 billion while passenger traffic rose 15 per cent to 58.5 million.

Before booking the loss on its stake in Aer Lingus, Ryanair's adjusted full-year net profit of €105 million, down 78 per cent on 2008, came in well ahead of expectations and it said it planned to at least double that this fiscal year.

While rivals airlines struggle in the face of falling demand, Ryanair said it is hoping to mop up business with chief executive Michael O'leary saying it might bid for Lufthansa.

"We are having a serious look at Lufthansa. We could almost buy it for cash," Mr O'Leary told a news conference in London.

"We are not planning any bids for Lufthansa in the foreseeable future but it is the only one of the other three large airlines that we would be interested in." Lufthansa's market capitalisation is €4.5 billion, or some €800 million less than Ryanair's.

At 1.30pm shares in Ryanair were down 1.3 per cent at €3.58, having earlier fallen by up to 5 per cent. The Dublin market was ahead 4.5 per cent at lunchtime.

"The numbers for the year just finished are obviously ahead of market expectations but the guidance he has given for March 2010 seems to be below what analysts had thought in their models up till now," a Dublin-based trader said.

"Basically we had been looking for net profit of somewhere around the high €300s and now (Michael) O'Leary is guiding somewhere between €200 and €300 so there is €100 million of a difference somewhere along the line."

Pretax profit was €93 million compared to €528 million a year earlier.

Ryanair said fuel costs last year were up 59 per cent at €1.25 billion and accounted for 45 per cent of operating costs, compared to 37 per cent in 2008. The company said it added 18 new aircraft to bring its fleet of Boeing 737-800 aircraft to 181.

Average fares fell 8 per cent due to the recession and the weakness of sterling.

The airline said ancillary revenues, such as sales of food, drinks and accommodation grew 23 per cent to €598 million and said it had achieved its target of 20 per cent of revenues coming from this source a year ahead of schedule.

Ryanair said it had cash reserves of €2.3 billion and had recently completed financing for 45 aircraft due for delivery from this October.

Looking forward Ryanair said it expected passenger traffic to rise 15 per cent to 67 million in its fiscal year 2009/2010 and said the airline had hedged 90 per cent of its full bill.

The airline said it expected to claim market share from competitors through its fare policy and said the combination of the recession, weaker sterling and its capacity growth will see average fares fall between 15 and 20 per cent.

"In this recessionary environment we intend to continue to offer European consumers... better value just like Aldi, Lidl, IKEA and McDonald's are doing in their respective industries," chief executive Michael O'Leary said in a statement.

"All of our major competitors have reported material reductions in short-haul capacity and traffic," Mr O'Leary said. "Ryanair will continue to lower fares to stimulate traffic growth, maintain high load factors and win more short-haul traffic from our high fare competitors."

"Ryanair has one of the best balance sheets in the industry and has by far the lowest cost base which should be down another 20 percent including fuel in full-year 2010," Davy analyst Stephen Furlong said in a note to investors. "Ryanair will be the key winner from this recession."