Ryanair Delivers Record Profits

4th Feb 2003

Ryanair, Europe`s No.1 low fares airline today (4 Feb`03) announced record traffic and profit growth for Q.3 (end 31 Dec`02). Passenger traffic for the quarter grew by 46% to 3.9m and average load factor jumped from 79% to 86%, primarily due to a further 8% reduction in fares - as predicted - during the quarter. This reduction in yields reflects the 1 million free seats promotion last October, the launch of four new routes from Frankfurt Hahn in December, and Ryanair`s continuing policy of offering the lowest fares in all markets. Total revenues in the quarter rose by 37%, however operating costs - rose at a slower rate by 28%. As a result Ryanair`s after tax margins, during the worst quarter in the year increased from 21% to 23%, and Net Profit increased by 50% to EUR43.2m.

Ryanair`s Chief Executive, Michael O`Leary said;

“These are another good set of numbers which result from the
disciplined way we are rolling out our low fares all over Europe. They
again highlight the difference between Ryanair and other so called “low
fare” carriers in Europe. We continue to earn increasing profits even
during the Winter period when others have confirmed that they will suffer losses. Ryanair`s reducing cost base enables us to continue to drive down air fares. Lower fares mean higher load factors on our new larger aircraft, whose lower operating costs in turn result in increased profits. This is a virtuous cycle of lower costs, lower fares, faster growth and increasing profits. No other airline in Europe can match Ryanair`s low fares and the gap between Ryanair`s prices and the rest continues to widen.

“We continue to be surrounded by opportunities. The average load
factor on our four new routes from Frankfurt Hahn in December was over 80%.
Advance bookings at our new Milan Bergamo base (which starts on 6 February) suggest that load factors for the first month will be in the very high 70`s if not 80% as well, and the initial customer response to our ninth European base at Stockholm Skavsta (which we announced last Tuesday) has been very encouraging. Based on our estimates for the final quarter we are now raising our guidance for the full year to EUR235m net profit after tax.

“We continue to limit any risks associated with our capacity growth
by spreading it across our network, launching new bases, new routes from existing bases, and increasing frequency on existing routes. Last week we announced our ninth European base at Stockholm Skavsta, but also five new routes from London Stansted (to France, Holland, Norway and Germany) and significantly increased frequency this Summer to Frankfurt (6 daily flights), Rome (5 a day), Stockholm (5 a day), Barcelona (3 a day) among others.


“All of this growth justifies our 100 new aircraft order which was
announced last Friday. With world-wide aircraft orders now significantly down, there has never been a better time to buy new aircraft. We are proud to extend our partnership with Boeing, the maker of the world`s most popular and best commercial aircraft, the Boeing 737. By ordering a total of 125 firm and 125 option aircraft we can begin the replacement of the 737-200 series, and maintain further organic growth across Europe as we transform Ryanair into the airline with the youngest fleet in Europe, in addition to being the most punctual (which we already are) and the lowest cost (which we
already are).

“The purchase of Buzz for the insignificant net cash sum of under
EUR5m, which was also announced last week was an opportunity too good to miss. We will be eliminating a number of Buzz`s loss making routes in order to allocate some of the aircraft to increase frequency on existing Buzz routes from London Stansted. The combination of Ryanair`s low fares and more efficient airports, as well as the conversion of Buzz into an all 737 operator over the next 12 months will result in the Buzz operation becoming profitable for the first time as we double its traffic from under 2m to over 4m pax p.a. We are aware that some commentators fear that we are biting off more than we can chew. We are conscious of this but one cannot always control the timing of opportunities that present themselves. However the
purchase price, made this deal in our view, a very attractive proposition.
Fortune favours the brave, and as Warren Buffet has proven many times, the time to buy is when everyone else is selling and prices are low. I believe that this is one of those times.

“With the addition of the Buzz traffic, and Ryanair`s own organic
growth, we expect to carry up to 24 million passengers in the coming fiscal year (end 31 March`04), a figure that would see Ryanair challenge Air France for the position of Europe`s third largest international scheduled airline.
We have the low fares formula, the people and the unrelenting determination to achieve these targets, by delivering disciplined, profitable, low fares growth to millions and millions of European consumers.

“Finally a word on the recently announced EU investigation of
Ryanair`s cost base at Brussels Charleroi Airport. This investigation will
be the test case for the cause of competition, choice and low fare air
travel in the European Union for the next 25 years. Many of our competitors including high cost airports and high cost airlines will seek to use this case to block Ryanair`s rapid growth at secondary and regional airports.
They do this in the hope of imposing higher costs and higher air fares upon consumers and to block competition and choice. They want to return to the bad old days of high fares for the rich few. This is wrong. The sole purpose of these incumbent complainers is to prevent the spread of choice and lower fares and to limit the growth of low fare air travel in Europe.

“The success of low fare airlines in the United States over the past
30 years and of Ryanair in Europe over the past 10 years depends upon encouraging and incentivizing underused secondary and regional airports to compete with dominant hub airports by providing lower costs and efficient facilities to those airlines who are willing to offer lower air fares to attract consumers to these airports. This is the very essence of free market competition, and it is already generating enormous savings for European consumers.

“I have every confidence that the Commissioner for Transport, Loyola
de Palacio will rule in favour of Brussels Charleroi and the Belgian
Government, as the evidence is overwhelming that (1) there is no element of State aid in our cost base and (2) secondary and regional airports offering lower costs and more efficient facilities allied to low fare services provided by Ryanair and others is in the best interests of competition and EU consumers.

“European integration and harmonisation depends upon the ease of
movement of people around the European community. For years in Europe air travel was confined to the rich few. Ryanair has changed all of that over the past ten years, and we are confident of the continuing support of Commissioner de Palacio and the EU Commission as we extend and expand the range of choice, routes, services and lower prices that we offer European consumers.



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