Sword Red Handle

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Fuel bills send Ryanair into the red

The low-cost airline Ryanair revealed today that it dived into the red by 169.2 million euros (£145.9 million) in the year to March after being hit with a 59 per cent hike in its fuel bill.

The loss compares with a profit of €390.7 million (£336.8 million) the previous year and comes after Ryanair faced record oil prices and a hefty writedown on the value of its investment in rival Irish carrier Aer Lingus.

But Ryanair - led by flamboyant boss Michael O'Leary - said it hoped to see a recovery in the current year, forecasting after tax profits to "at least double" thanks to expected lower fuel costs.

Ryanair shares fell 6 per cent following news of the loss in the year to 31 March - thought to be the first in the airline's history.

However, the company maintained that on an underlying basis and with a €91.6 million (£79 million) writedown on the Aer Lingus stake stripped out, its figures showed a more "robust" net profit of €105 million (£90.5 million).

Ryanair also pledged to continue slashing prices to attract consumers in the recession.

It saw fares fall by 8 per cent in the past year and said average prices would drop by another 15 per cent to 20 per cent this year to around €32 (£27.60) per passenger amid a "deep recession".

Mr O'Leary said the airline would continue to tap into the consumer search for value for money.

"In this recessionary environment, we intend to continue to offer European consumers more competition, more choice and even better value just like Aldi, Lidl, Ikea and McDonalds are doing in their respective industries."

The sector has been battered over a turbulent past year, as oil prices hit nearly 150 US dollars a barrel last summer and as cash-strapped consumers cut back on travel.

Ryanair's fuel bill rocketed to €1.25 billion (£1.09 billion) amid last year's oil price bubble, although the group hopes to see fuel costs plunge by €450 million (£387.7 million) in the current year.

But while the cost of crude has fallen significantly, carriers now face further economic headwinds.

Virgin Atlantic tycoon Sir Richard Branson warned today the global recession will make this year the "worst in the history of aviation" for the industry in a sign of the continuing tough conditions.

source: http://www.independent.co.uk/

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