Ryanair's oil change

2 August 2005 By Fiona Maharg-Bravo

If airlines are going through a difficult patch, someone forgot to tell Ryanair. Its net profit was up 21% in the quarter. Soaring oil prices appear to be driving more passengers towards the Irish nofrills carrier, so operating margins are holding up for now.

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Ryanair announced a betterthanexpected 21% rise in net income to E64m in the first quarter, despite a 112% jump in fuel costs. Excluding fuel, unit costs fell by 6%. The Irish nofrills carrier reported a 35% increase in revenues in the quarter on the back of a 30% surge in traffic and a 3% increase in yield, or average fare.

Michael O'Leary, the Ryanair chief executive, attributed the rise in yields to the fuel surcharges imposed by his rivals. He also said the bomb attacks in London have not materially affected bookings, but warned that further incidents could have an adverse impact.

He said: Our outlook for the remainder of the year is cautious as we continue to budget for higher oil prices but anticipate that these will be partly offset by a combination of other cost reductions and current benign yield environment.

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