Ancillary growth slowing at Ryanair

Ryanair has announced it now expects to make a €275 million profit for the current financial year after a “disappointing although better than expected” third quarter.

The low fares carrier slashed its losses during the October to December period to €11million, compared with €211 million in the same three months last year. 

During the quarter, it carried 16 million passengers, compared with 14 million in quarter three of 2008. Load factors were up by 1% to 82%.

Average fares were down by 12%, with the drop in yield coming in at a better-than-expected 12%. Ryanair now expects yields for its full year to drop by around 15% against previously guided 20%, prompting its revised full year profit forecast.

Previously it was expecting to report a profit “at the lower end of the range of €200m to €300m”.

The airline continues to cut costs, with fuel costing 37% less this quarter. Unit costs excluding fuel fell by 4%.

One cost which did see an increase on the operating expenses line was “marketing, distribution and others”, which increased by 4% but still accounted for only €32.4m. The total spend for nine months was less than €100m.

Ancillary revenues, which cover all revenues other than the cost of the seat, increased by 6% to €139.4m, slower than the 14% rise in passenger volumes “due to a decline in average spend per passenger primarily due to lower excess baggage revenues, and the adverse impact of the movement in euro/sterling exchange rates.”

CEO Michael O’Leary repeated his claim that Ryanair was flourishing in the current challenging aviation sector climate.

“Market conditions remain difficult, although the increasing pace of consolidation and closures among our competitors allied to Ryanair’s continuing fleet expansion will lead to further market share gains this year in particular in Italy, Scandinavia, Spain, and the UK,” he said.

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