LONDON -- Ryanair (ISE: RYA.L) opened 4% down this morning on news of a 29% slide in profits to 99 million euros, down 40 million euros from 139 million euros in 2011, despite 11% growth in revenue, up to 1,284 million euros, and a 6% growth in traffic, with passenger numbers up to 22.5 million. The fall in profits is attributed to a 27% increase in fuel costs, which account for almost 50% of total operating costs.
Ryanair CEO Michael O'Leary commented:
Q1 yield increases were dampened by the EU wide recession, austerity measures, and heavily discounted fares at our new base launches in Cyprus, Denmark, Hungary, Poland, Provincial UK and Spain. Excluding fuel, Q1 unit costs rose by 3%, as we rigorously controlled costs, despite a 2% rise in flight crew pay, higher charges at certain airports, and the impact on costs of stronger Sterling against the Euro.
Despite this challenging environment Ryanair continues to grow its traffic across Europe while maintaining the lowest unit costs in the airline industry, and generating healthy profits as evidenced by the 8% after tax margin achieved in the first quarter.
Our outlook remains cautious for the year. We expect full year traffic to grow 4% (7% in H1, and 1% in H2 due to winter capacity cuts). We expect positive yields will continue in Q2 and anticipate smaller fuel cost increases (due to higher Q2 comparable last year and fuel saving measures we have implemented). Currently, we have no visibility of next winter's yields but expect that continuing austerity, EU recession, and lower yields at new bases will to restrain fare growth. Until we get some H2 yield visibility our guidance for FY 13 remains unchanged, in the range of 400m euros to 440m euros as previously guided.
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