RYANAIR ANNOUNCES RECORD Q1 PROFIT INCREASE
TRAFFIC GROWS 38%, PROFITS RISE BY 68%
Ryanair, Europe’s largest low fares airline today (Tuesday, 6 Aug 2002) announced its biggest increase in Q1 profits (end 30 Jun 02). Passenger traffic during the quarter rose by 38% to 3.54m (the first quarter in Ryanair’s history when over 1m pax were carried each month) due in large measure to a further 7% reduction in average air fares. Total revenues grew by 29% to €194.3m, however operating expenses rose by only 22% to €148.9m with the result that profits rose significantly ahead of expectations by 68% to €39.0m.
Summary Table of Results (Irish GAAP) - in Euro
Announcing these results Ryanair’s CEO Michael O’Leary said:
"This record increase in Ryanair’s quarterly profits is a direct result of the key elements of our unique low fares model. Firstly very strong traffic growth in all our new and existing markets, secondly extremely disciplined cost-management, and thirdly using these lower costs to drive down airfares for our customers.
"Our traffic growth during Q1 was outstanding, with high load factors on all 10 routes to/from our new German base at Frankfurt Hahn, and our 8 new routes to/from London Stansted. Existing markets have also grown strongly where we were able to allocate bigger aircraft or increase frequencies. Average load factors for the quarter rose from 77% to 83%.
"Despite this strong growth Ryanair continues to deliver impressive cost discipline. Operating expenses increased at a considerably lower rate (+22%) than revenues (+29%). The fact that marketing and distribution costs declined by 11% during a quarter when we were promoting our new German base and over 20 new routes, highlights the strength of Ryanair’s unique low fares formula in Continental Europe. Despite the protestations of Lufthansa, (who continue to predict that low fares won’t work in Germany), Ryanair enjoys load factors of over 80% on our 10 routes to/from Frankfurt Hahn. We will continue to expand in this market where Ryanair is now Germany’s largest low fares airline.
"There is no doubt that the tumultuous events in the airline industry over the past 12 months have created huge new growth opportunities. Ryanair leads the low fares market in Europe by some considerable distance, as our average fares are over 50% lower than those of Easyjet/Go. Our strong organic growth continues and we enjoy a surplus of new route and new base opportunities. We expect to open at least one new base in Europe each year for the next 3 or 4 years, as we grow at a disciplined and controlled rate to the benefit of our customers, our shareholders and our staff.
"In view of these increased opportunities, Ryanair has agreed with Boeing to convert 3 of our rolling 50 option aircraft into firm deliveries during spring 2003 (making a total of 13 new aircraft to be delivered in advance of summer 2003). These additional firm orders will enable Ryanair to grow at the slightly faster rate of 30% for the next two years to just under 20m passengers in 03/04. With these new deliveries, Ryanair will start to retire our older Boeing 737-200 aircraft one year earlier than planned in 2003, and the balance will be retired over a four year period to 2006, at which date Ryanair will have the youngest fleet of aircraft in Europe.
"We welcome the initiative of the new Minister for Transport in Ireland to proceed with the construction of a temporary low cost terminal facility at Dublin whilst at the same time inviting proposals for a second (and hopefully more) competing terminals at Dublin Airport. This initiative, will finally introduce competition in the Irish Airport sector, and this will result in lower prices and better facilities for Irish consumers and visitors. If the Minister proceeds to introduce such competition, then Ryanair envisages launching a wide range of new, very low fare routes between Ireland and Continental Europe, an initiative that has the capacity to create thousands of new jobs as well as bring millions of new visitors to Ireland on a year-round basis.
"Ryanair’s continuing success would not be possible without the outstanding performance and contribution of our 1,700 people. We are the most productive airline group in Europe, and we continue to deliver outstanding customer service in a friendly and efficient way, which is why we continue to enjoy such high levels of repeat business. I want to say a sincere thank you to each and every one of you for another outstanding performance over the past quarter.
"Finally, a note of caution. Whilst we have enjoyed a very strong first quarter, much of this exceptional profit growth is due to the impact of the launch costs of many new routes in the corresponding Q1 last year, whereas this year most of this launch activity was expended in the preceding quarter (Q4 Jan/Mar02). We will not repeat a 68% growth in net profits in Q2, and going forward we expect to see profit growth running in line with previous guidance for the remainder of the year. It is my policy, as always, to advise investors and analysts to remain sensible in their outlook for Ryanair as we ourselves will continue to be.”
Ends. Tuesday, 6 August 2002
