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Ryanair to US for €10?
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02-11-2008 7:41pm#1
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More of O'Leary blowing smoke out his ar$e to cover a sharp drop in profits and trying to keep the share price up.
http://www.nytimes.com/2008/11/04/business/worldbusiness/04ryan.html?ref=worldbusiness
Profits Decline at Ryanair
By CAROLINE BROTHERS
Published: November 3, 2008
Ryanair, the low-cost airline, reported a sharp drop in first-half profit Monday, citing higher fuel costs and the economic slowdown.
Higher fuel prices accounted for half of Ryanair’s operating costs in the six months to Sept. 30 — up from 36 percent a year earlier. The carrier was also stung by write-offs for a 29 percent stake in the Irish flag carrier Aer Lingus, whose value has deteriorated in the last two years, as well as depreciation in the value of aircraft Ryanair intends to sell.
Earnings in the six-month period fell 77 percent, to 95.3 million euros ($120.8 million) compared with 407.6 million euros in the period a year earlier.
Revenue rose 16 percent, to 1.81 billion euros, from 1.5 billion in the year-ago period.
Low-cost and traditional carriers struggled as fuel prices rose to record levels before receding, while at the same time a global economic slowdown has lowered demand for air travel.
Ryanair shares climbed Monday after Michael O’Leary, the chief executive, said that profit would rebound in 2009 if oil prices remained at around $80 a barrel.
News that the company had little oil price hedging in place also buoyed the stock, which closed Monday in Dublin at 2.83 euros, up 8 cents. Hedging protects an airline at a time of rising prices, but can be detrimental when prices decline.
“We have a significant cost advantage over our competitors, many of whom have hedged fuel next year at significantly higher levels than current market prices,” Ryanair said in a statement. “This will force competitors to further increase airfares and widen the price gap between them and Ryanair’s lowest fares.”
Ryanair underlined its confidence by announcing a new price war Monday, flooding the market with a million seats at £10 each on 250 routes.
In response to questions, Mr. O’Leary said that establishing a discount trans-Atlantic airline would depend on the availability of a fleet of long-distance aircraft — unlikely over the course of the next 18 months.
Mr. O’Leary last evoked the idea of discount trans-Atlantic service in April, before oil prices rose.
He envisaged the airline as a sister or associate company to Ryanair that would offer airfares starting at 10 euros before taxes and fees.
Airports that could be used in Europe include Stansted outside London, as well as Dublin, Milan, Frankfurt, Rome and Barcelona, while destinations could include New York, Dallas, Denver and cities in Florida, a Ryanair spokeswoman, Pauline McAlester, said. But she stressed that the project was still at the “what if” stage.
Still, industry specialists and executives at other low-cost airlines are skeptical about the applicability of the low-cost business model to long-distance routes.
He's like your man of little Britain... look into my eyes look into my eyes
Wasn't there talk of Ryanair putting at least 20 of their aircraft in storage due to over capacity and non profitable routes?.0 -
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