Profits soaring at no-frills Ryanair

By Andrew Bushe

DUBLIN — After-tax profits at no-frills airline Ryanair soared by 44 percent to a record 150 million euros for the year to the end of March as it cashed in on a huge demand for low cost flights.

Passenger numbers swelled by 38 percent to over 11 million and load factors on planes rose by 4 percent to 81 percent.

“This is another set of outstanding financial results from Ryanair, despite the impact on the airline sector of both the foot-and-mouth outbreak in the UK, and the tragic events of 11 September in the U.S.,” chief executive Michael O’Leary said last week.

While other airlines, particularly national flag carriers like Aer Lingus, have been struggling to shake off the general travel industry malaise and boost passenger numbers, Ryanair’s formula of cutting fares further has paid off. Fares dropped by 8 percent during the year.

The success of Internet booking system also helped boost profits. It resulted in marketing and distribution costs going down by 42 percent despite the increase in passenger traffic.

O’Leary said that Ryanair’s success in the German market, where it has gone head to head with the Lufthansa national airline, “has surprised even ourselves.”

It highlighted the consumer behavior law already established by U.S. Southwest Airlines and the Wal-Mart supermarket chain that “customers will flock to out-of-town secondary locations in order to avail of lower prices and avoid congestion.”

O’Leary said that those who had predicted failure in Germany had ignored the tremendous success there of low price retailers like Aldi, Lidl, McDonald’s and IKEA.

In January, the company ordered up to 150 new Boeing 737-800 aircraft — 100 firm and 50 options — and O’Leary said this would enable it to grow over the next eight years to become Europe’s biggest carrier, with over 40 million passengers per annum.

He predicted it would be the winner in the battle with the linked up Easyjet and GO low fare operations.