Ryanair has reported a loss of €102m for the third quarter ending December 2008, but raised its full-year outlook to a profit from breakeven, due to lower fuel costs.
The third quarter loss compares with a profit of €35m reported the same time the previous year.
The airline said the loss was disappointing, but had been expected. Fuel costs rose by 71% to €328m in the third quarter and accounted for 47% of the airline's operating costs. However, it said it expects to reduce its fuel bill by about €500m in the next fiscal year.
Ryanair said that average fares fell by 9% to €34 due to weaker sterling and recession. The airline said its revenues rose by 6% to €604.5m as its passengers numbers grew by 13% to 14 million.
Ancillary revenues for the three months grew by 19% to €132m, and now account for 22% of revenues.
The carrier says its balance sheet continues to be one of the strongest in the industry with over €1.8 billion in cash at the end of its third quarter.
A statement from the group says that the general economic environment remains extremely difficult, as the recession saps economic confidence.
But it added that due to lower oil costs, it expects its fourth quarter loss to be smaller than previously anticipated and is upgrading its full year guidance from breakeven to a net profit after tax of between €50m to €80m.
It also expects fourth quarter average fares to decline by 20%, at the upper end of its its previous guidance, due to aggressive price promotions, the decline in sterling and the impact of the recession.
Looking ahead to the next fiscal year, Ryanair said it sees 'significantly' lower oil costs due to its recent hedging programme. This will enable it to reduce fares and in turn drive its passengers numbers' growth. It said it won't be able to give earnings guidance for next year until the fare environment becomes clearer.
'At this time we expect fares next year to fall by over 10%, although if the recession deepens, it could be worse than this,' it cautions.
'However, the 38% reduction in oil prices which our fuel hedging has secured will ensure that Ryanair returns to substantial profitability next year, when many of our competitors will be reporting losses,' it states.
'The longer and deeper this recession, the better it will be for the lost cost producers in every sector,' it says.
Ryanair shares closed up 20 cent at €3.07 in Dublin.
