Ryanair posts loss of £8.5 million
No frills airline Ryanair has posted a loss for the final three months of 2010.
Chief executive Micheal O'Leary said the carrier had been expecting to break even in the third quarter but reported a net loss of 10.3 million euros (£8.5 million), compared with a deficit of 10.9 million euros in the previous year, as strikes and severe weather grounded its aircraft.
However, a 15% rise in average fares to 34 euros (£29), a surge of 20% in ancillary revenues, such as in-flight sales of refreshments and entertainment, and a 6% hike in passenger numbers helped offset the impact of strikes in Europe and heavy snowfall in the UK.
The airline faced a 37% rise in its third-quarter fuel bill but Mr O'Leary said the group was on course to hit full-year net profits at the upper end of its forecast range of between 380 million euros (£325 million) and 400 million euros (£340 million).
Mr O'Leary said: "This small third-quarter loss of 10 million euros is disappointing, as we were on track to break even, but earnings were hit by a series of air traffic control strikes in the third quarter, compounded by a spate of bad weather airport closures in December."
Mr O'Leary added that the 3,000 flight cancellations in the third quarter compared with 1,400 in the whole of the previous fiscal year.
He said that, although oil prices had risen significantly in recent months, the airline's "fuel hedging strategy" was continuing to pay off, with 90% of fourth-quarter fuel bought at a reduced rate.
Mr O'Leary said he was surprised that recent commentary on the Irish economy had clouded analysis of Ryanair.
He said: "Ryanair has little exposure to the Irish economy."
In light of the adverse weather disruption, the chief executive took the opportunity to hit out at European regulations which require airlines to compensate passengers during widespread cancellations.
Mr O'Leary heavily criticised the directives after the volcanic ash cloud crisis, which led to airlines forking out millions in compensation to customers.
He said: "It is inequitable that airports enjoy a boost to their restaurant and retail revenues from stranded passengers when their runways close, yet the airlines are obliged to pay for meals, drinks and hotels, when these cancellations are outside our control."
Ryanair is not the first airline to flag up the cost of severe weather disruption.
Earlier this month, low-cost rival easyJet said the snow chaos cost it £18 million, while British Airways estimated the disruption will cost it £50 million.