* Misses analysts forecasts on Q1 profit
* Revenue up 29 pct, but fuel price 50 pct higher
* Strong summer sales will enable it to hit year profit
By Conor Humphries
DUBLIN, July 25 Ryanair said higher
summer sales would keep it on track to meet earnings targets
this year after soaring fuel costs squeezed profit in the three
months to June.
Europe's largest low-cost airline carried 3 million more
passengers from the quarter a year ago and earned more from
baggage fees and sales of in-flight food and drink, boosting
revenue by 29 percent.
But a 50 percent surge in fuel prices cost 140 million euros
more than planned, pushing profit below market expectations. Its
shares traded down 2 percent at 3.39 euros by 1113 GMT.
"It's a solid performance, even if the costs may have
surprised some," said Brian Devine, an analyst at NCB
"But there is no real catalyst for the share price. The
market's profit expectations for the year are well ahead of
Ryanair's and there is nothing here to change that," he said.
The airline made a profit after tax of 139.3 million euros
in the first quarter, up 1 percent on a year ago but below the
151 million in a Thomson Reuters poll of analysts.
It maintained its profit forecast for the year of 400
million euros, unchanged from the previous year , as it sees
growth of 12 percent in fares and 4 percent in traffic balanced
by a 13 percent rise in operating costs per passenger.
Analysts have been forecasting 447 million euros.
SEES 'VERY STRONG' Q2
Full-year profit will depend heavily on the second quarter
as the company focuses more on summer sales and plans to trim
capacity in the winter. It said a 10 percent growth in traffic
in the first half would be followed by a 4 percent fall in the
"We are going to have a very strong Q2 and we are confident
that despite high oil prices we can deliver net profit of 400
million euros," Chief Financial Officer Howard Millar told
Reuters in a telephone interview.
"Consumers are clearly spending money this summer but we
will have to see what the winter brings," he said.
Ticket prices were up 11 percent in the first
quarter on traffic growth of 18 percent compared with the
year-ago quarter, when a volcano in Iceland grounded 9,400
The airline hopes an optional 10 euro charge on some
routes for extra leg room will boost income from ancillaries,
which accounted for 21 percent of income in the first quarter.
Ryanair, which has lost tens of millions of euros in the
past through poor fuel price hedging, said it was 90 percent
hedged on fuel at around $86 a barrel for the year to March.
But the airline said it was disappointed by Boeing's
decision to scrap plans for an all-new 737 short-haul
jet and instead upgrading its current design with new
Ryanair exclusively flies 737s and has said it could be in
the market for up to 300 aircraft for delivery by 2016.
"Our preference would have been for a redevelopment," said
Millar. "The key driver will be pricing and how much fuel it
would save. It's very early days, but clearly it's something we
have to look at."
Ryanair, which last month signed a deal with
the Commercial Aircraft Corporation of China to help it design a
rival to the 737, said it would consider an alternative to
Boeing if the current fleet economies could be maintained.
(Editing by Greg Mahlich)