Ryanair has today reported a 47% drop in first half profits for the six months to the end of September - in line with analysts' expectations - as fuel costs more than doubled from €392.7m to €788.5m.
The airline said its H1 profits amounted to €215.6m, from the figure of €407.6m the same time last year. Revenues rose by 16% to €1.811 billion from €1.554 billion on a 19% increase in passenger numbers.
Ancillary revenues, which grew by 28% to €322m, account for almost 18% of revenues versus 16% last year. Fuel accounted for over 50% of its total operating costs as the cost per barrel doubled from $63 to $125.
Ryanair said its load factor slipped by 1% to 85% compared to the same time last year.
The airline said that falling second-half ticket prices offset by lower fuel costs would lead it to break even in the full year.
Ryanair CEO Michael O'Leary said that if oil prices remain at around $80 a barrel next year, its earnings would rebound strongly. He said the airline is 80% hedged for the third quarter of the year at $124 and totally unhedged for the final quarter.
He said the airline had taken advantage of recent falls in oil prices to hedge 25% of its first and second fiscal quarters in 2009/2010 at an average of $77 a barrel. 'This will lock in substantial saving over the $125 paid in the half year to September 2008,' O'Leary said.
The carrier said that during the six month period, it wrote-off €93.6m on its Aer Lingus shareholding. It said this reflected the decline in Aer Lingus shares prices, which went from €2 per share in March 2008 to €1.40 a share in June 2008.
The share price is currently worth around €1.06 and Ryanair said that if it remains there, it will be forced to take another impairment charge of € 57.3m at the end of the next quarter.
Michael O'Leary said that the outlook for the rest of the fiscal year is dependent on fares and fuel prices. He predicts that the recession will continue to drive down oil prices and fares this winter.
'We will continue to respond with lower fares and aggressive price promotions to keep Europe flying and to maintain our market leading load factors,' he stated.
He said that although the airline has limited visibility, he believes that average fares in the second half will fall by 15-20%, leading to losses in the third and final quarters.
'Our full year average fare could fall by almost 12%, although lower fares will be largely offset by lower fuel costs. As a result, our previous guidance remains unchanged and we remain confident that we will break even for the full year,' he said.
The Ryanair boss also said it was no secret that the airline is setting up a sister company to fly cross the Atlantic, but that nothing could happen until the airline secures a long haul fleet.
Shannon flights may be cut down
Later, Ryanair deputy chief executive Michael Cawley warned that Ryanair may be forced to cut flights and traffic from its Shannon base by up to three-quarters from next November, unless changes are made to the government's planned air travel tax.
Cawley, said the €10 departure tax per flight would have a disproportionately large effect on fares on short haul routes.
Ryanair is not in a position to cut its fares to and from Shannon any further to take account of this, he warned. As a result, he said, services to and from Shannon may have to be curtailed.
He urged the Government to look at introducing a weighted tax, perhaps based on a percentage, which would make the tax more proportionate to the relevant fare.
Ryanair shares added eight cent to close at €2.83 - almost 3% higher - in Dublin this afternoon.
