Euro woes to snuff out Ryanair profit

Ryanair, Europe's biggest budget airline, warned high fuel costs and a worsening economic outlook in Europe meant profit would slip by up to 20 per cent in the coming year, the first fall in four years. The Dublin-based airline, famous for its no-frills service, posted a record annual profit on higher fares for the year to March, but warned its run of growth of at least 25 per cent profit every year since 2009 was likely to come to an end. "Recession, austerity, currency concerns and lower fares at new and growing bases...will make it difficult to repeat this year's record results," chief excutive Michael O'Leary said. "If we were guiding a blue sky scenario with rising fares into next winter, we would be nuts," he said. The airline confirmed it would pay out €483 million (Dh2.27 billion) to shareholders in just its second dividend payout since floating in 1997. Its share price was down 4.32 per cent compared to a flat Irish market. Net profit reached €503 million for the year to March, up 25 per cent on the previous year, compared with a forecast of €491 million by analysts polled by Thomson Reuters I/B/E/S. But it warned worsening economic conditions in Europe and stubbornly high fuel costs would cut its profit to between €400 million and €440 million in 2013, making it the first year since 2009 that profit has fallen. The airline is being "a little bit conservative" in its outlook due to poor visibility about its performance in the winter, O'Leary told analysts in a conference call. The possible collapse of some European rivals could yet boost revenues, he said. The airline, which has a lower cost base than many of its competitors, raised fares 16 per cent over the year to help offset a fuel bill that was 30 per cent higher. But it warned it would be unable to pass on an additional €320 million hike in fuel costs expected in the coming year. "There's a poor environment, it's the fourth year of this, and repeating [fare growth of] 16 percent is not going to happen," chief financial officer Howard Millar said. He added fares would likely rise by closer to 3 per cent. Ryanair is not as worried about the fallout of Greece's current political crisis as the fact that the Eurozone is suffering its fourth year of poor economic performance, he said. "Greece is very small for us...we would be more concerned about places like Spain, its high unemployment and plans to raise taxes," he said. Traffic will grow by 5 per cent for the second year in a row to reach 79 million in the year to March 2013, he said.