Ryanair profits up 20% but soaring fuel to impact next year

Ryanair has posted a 20 percent rise in annual profit but warned soaring fuel prices could mean it will only break even in the year ahead.Net profit excluding one-off items rose to 480.9 million euros in the 12 months to the end of March versus 401.4 million euros a year earlier.

Europe’s biggest low-cost carrier said, however, its unadjusted net profit fell to 390.7 million euros from 435.6 million euros the previous year once it had included exceptional items, including a 91.6 million euro write down in the value of its stake in Irish rival Aer Lingus.

Ryanair said it was better placed than all other European airlines to absorb higher oil costs, even if it means profits fall in the short term.

Chief Executive Michael O’Leary said: “Based on forward bookings, we now believe it likely that average fares for the coming year will rise by approximately 5% and if oil prices remain at $130 per barrel, then we expect to accordingly breakeven for fiscal 2009.”

Ryanair, which said last month its fuel needs were mostly unhedged for the current year, predicted oil would become cheaper over the medium term, helping its earnings rebound strongly, but it was not sure when this would happen.

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He added: “Higher oil prices will increase the attraction of Ryanair’s guaranteed lowest fares, as consumers become more price sensitive, as competitors increase fares and fuel surcharges, and as many European airlines consolidate or go bust, a development which we believe is inevitable if oil prices remain above $100 this winter.”
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