Ryanair Results Exceed Expectations

10th Jun 2002

Ryanair, Europeå‘s largest low fares airline today announced financial results for the year
(end Mar 31, 2002) which are significantly better than the consensus of analysts
expectations. After tax profits for the year have risen by 44% to a new record of
å€150.4m. Passenger traffic grew by 38% to 11.10m and load factors rose to 81%.
Average fares declined (as predicted) during the year by 8%, due to the impact of foot and
mouth disease and 11 th September.
In addition to the strong traffic figures, a vigorous performance by ancillary revenues (up
34%) contributed to robust revenue growth of 28% to €624.10m. Unit costs continued to be
reduced, particularly marketing and distribution costs which actually declined by 42%
(despite 38% traffic growth) thanks to the successful development of RYANAIR.COM,
Europe’s biggest travel website. Total operating costs increased at a lower rate than
revenues despite the launch of 22 new routes and two European bases at Brussels Charleroi
and Frankfurt Hahn.
Unlike almost all other carriers during the period, operating margins actually increased
by 3% points from 23% to 26% whilst net margins also increased from 21% to 24%.
Profit after tax has risen dramatically by 44% to €150.4m, despite the period being one
of the worst in aviation history. Earnings per share grew by 39% to 20.64 cent per share.
Announcing these results in London, Ryanair’s CEO, Michael O’Leary said:
“This is another set of outstanding financial results from Ryanair, despite the
impact on the airline sector of both the foot and mouth outbreak in the UK, and
the tragic events of 11 September in the U.S.. These two events adversely
impacted all airlines, so our increase in passengers and profits last year is
further testimony to the robustness of Ryanair`s - unique low fares formula in
Europe. No other airline in Europe can match Ryanair’s low fares, our costs,
or our profitability”.
“During the past year Ryanair took delivery of 10 new Boeing 737-800
aircraft, and successfully opened two new Continental European bases at
Brussels Charleroi and Frankfurt Hahn. In addition, we recently launched
8 new routes from London Stansted including one to a new country, Holland,
with daily services to Eindhoven. Ryanair’s overnight success in the German
market has surprised even ourselves. In the first months of operation our Frankfurt Hahn base is enjoying load factors of 80%, primarily because our
airfares are up to 80% lower than those of Lufthansa and Deutsche BA. Many
German consumers are travelling distances of over 200kms just to avail of
Ryanair’s low fares. We now expect to carry about 2m. passengers on our
German routes alone this year. Ryanair’s immediate success in Germany
highlights yet again the consumer behaviour law already established by
Southwest Airlines and Wal-Mart, namely that customers will flock to out of
town secondary locations in order to avail of lower prices and avoid
congestion. This is as true for airports as it has always been for
supermarkets, and just like Southwest and Wal-Mart, nobody, but nobody
beats Ryanair’s prices”.
“Many of the so called experts (most of whom seem to work for Lufthansa) who
predicted that Ryanair’s low fares would not “take off” in Germany, appear to
have ignored the tremendous success of low price retailers such as Aldi, Lidl
McDonalds and IKEA in the German market. German consumers love a
bargain and now that there is a real choice over Lufthansa’s high fares, they
are flocking in their hundreds of thousands to Ryanair”.
” Our rigorous control of costs and the reductions achieved in the aftermath of
September 11 enabled Ryanair to further lower air fares by 8% during the year
and still deliver an increase in profits by 44% to €150.4m. At the same time
net margins were increased by 3% points to an industry leading 24%”.
“Our timely order in January for up to 150 new Boeing 737-800 aircraft (100
firm and 50 options) will ensure that Ryanair has the fleet to enable us to
deliver strong growth over the next 8 years and become Europe’s largest
carrier with over 40 million passengers per annum.
” Ryanair has for some time believed that there would be consolidation in the
European low fare industry and that one or two very big low fare carriers
would emerge. Following the Easyjet acquisition of GO (and possibly DBA)
Ryanair will be the only ” low fares” European carrier as the following table
“Our successful expansion from our Brussels and Frankfurt bases as well as
our continued strong growth at established bases in London, Glasgow and
Shannon has resulted in our traffic growth significantly exceeding our
20% -25% target. We envisage this strong growth continuing for the next two
years when we expect traffic to grow at a rate of 30% -35% per annum before
steadying back at 25% per annum thereafter. This growth is being
underpinned by the increasing gap between Ryanair’s airfares and those of all
our competitors, and the continuing tendency of our high fare and not so low
fare competitors to focus on high cost, inefficient, congested airports which
will increase their costs and their fares.
Since Ryanair will continue to reduce fares, the price gap between us and all of
our competitors is getting wider. As these robust results demonstrate, Ryanair
is and will continue to be the fastest growing, most profitable, and lowest cost,
low fares airline in Europe.


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