Ryanair profits dive 85%

The bad news continues in the airline industry after budget carrier Ryanair warned if oil prices continue to be high, it could make an annual loss of up to €60 million (£47.4 million).

The airline’s chief executive, Michael O’Leary, said that Ryanair expected to break even ‘at best’ in the year to March 2009.

Europe’s largest no-frills airline said profits in the second quarter had fallen by 85% to €21 million, below analysts forecasts. Furthermore, the company said it is yet to fully hedge the price it paid for oil.

Ryanair’s fuel bill now represents almost 50% of its operating costs, compared with 36% last year.

Shares in Ryanair fell 15%, while British Airways lost 4.7% and Easyjet fell 10%. Soaring oil and fuel costs are having a devastating affect on the airline industry. US carriers including ATA Airlines, Aloha Airgroup and Skybus Airlines, EOS and Maxjet have all ceased trading as a result.

British Airways (BA) is expected to announce cutbacks later this week as a result of soaring fuel prices. BA is to ground 20% of short-haul flights with the majority being at London’s Gatwick airport.

Mr O’Leary said that the outlook for the remainder of the fiscal year remains poor, adding that the airline will look to maintain slashing fares in order to maintain high plane usage and avoid fuel surcharges.

Consumer confidence in the UK and Ireland is plummeting in an emerging economic recession, according to Mr O’Leary.

Earlier this month, Ryanair said it is to cut around 250 flights from London’s Stansted airport.

The cuts at the Irish airline will see the number of weekly flights fall by 14% and carry approximately 900,000 fewer passengers as it trims its Stansted fleet from 40 to 28.

The cuts will result in job losses of between 100 and 150 staff, including cabin crew and ground staff at Stansted.

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