Ryanair Holdings, Europe’s largest no-frills carrier, on Monday said its profit climbed during the fiscal second quarter as declining fuel prices more than offset the impact of declining average fares.
But the airline, traditionally a cautious one, repeated its concern that fares may drop by up to 20% this winter, which could cause “material” losses over the next two quarters, and used the report to pick a fight with its aircraft supplier, Boeing.
The revenue dip came as average fares dropped 20%, which the airline blamed on the recession, price promotions, adverse swings in the euro/sterling rate and a decline in ancillary revenue per passenger.
The airline did fly 18% more passengers, however.
And operating expenses dropped 16% to 694 million euros, as fuel prices slumped 42% and unit costs outside of fuel slipped 5%.
The group repeated that fiscal year profit may be at the low end of a 200 million to 300 million euro range.
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Analysts polled by FactSet had expected a profit of 289.9 million euros for the quarter and 277 million euros for the year.
In opening trade, Ryanair shares dropped 7%, and are down roughly 19% this month.
“I regret to report that we have made little progress in our discussions with Boeing for an order of 200 aircraft for delivery between 2013 and 2016,” he said.
“We won’t continue these discussions indefinitely and have signalled to Boeing that if they are not completed before the year end, then Ryanair will end its relationship with Boeing and confirm a series of order deferrals and cancellations. We see no point in continuing to grow rapidly in a declining yield environment, where our main aircraft partner is unwilling to play its part in our cost reduction programme by passing on some of the enormous savings which Boeing has enjoyed both from suppliers and more efficient manufacturing in recent years.”
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