Ryanair Profit Falls 85% on Oil; May Post Annual Loss

Ryanair Holdings Plc, Europe’s biggest discount airline, said profit fell 85 percent, missing analysts’ estimates, and may post its first full-year loss since going public in 1997 because of increased fuel expenses.

Ryanair dropped as much as 25 percent in Dublin trading after saying today first-quarter net income excluding writedowns fell to 21 million euros ($33 million) from 138.9 million euros a year earlier. Analysts had predicted profit of 50.9 million euros. Sales rose 12 percent to 777 million euros in the three months ended June 30, also missing estimates.
The carrier, struggling with record oil prices and a slowdown in consumer spending, expects an annual result of between breakeven and a loss of 60 million euros. Ryanair predicted yields, or average ticket prices, could fall as much as 5 percent in the full year as it lowers fares. Ryanair had previously said it would probably break even this fiscal year.

“They’re certainly more negative on the outlook,” said Neil Glynn, an analyst at NCB Stockbrokers in Dublin with a “hold” rating on the stock. “The drop-off in yields is quite worrying. It might signal some weakness in last-minute bookings. It does suggest a lesser ability to pass on fuel costs to the passenger than the market would have anticipated.”

“If this airline is going to survive and prosper, it’s got to double its fares, its got to do what other airlines are doing and cut capacity,” said Howard Wheeldon, senior strategist at BGC Partners in London.

Bloomberg