* Q1 net profit 99 mln euros vs 123 mln forecast
* Average fares up 4 percent, weaker than expected
* Shares down 2.0 percent
* FY 2013 net profit forecast unchanged at 400-440 mln euro
By Conor Humphries
DUBLIN, July 30 Ryanair, Europe's
biggest budget airline, undershot analyst forecasts with a
profit slide of 29 percent in the three months to June as it
grappled with a toxic mix of austerity, recession and stubbornly
high fuel prices.
The Dublin-based airline, which is waiting to hear whether
EU regulators will approve its takeover of Aer Lingus,
said the weak economic outlook for Europe would continue to
restrain fare growth for the rest of the year.
"There is no sign of a European-wide economic recovery.
There doesn't seem to be any light at the end of the tunnel,"
Chief Financial Officer Howard Millar told Reuters Insider TV.
The airline maintained its forecast of a profit of between
400 million euros ($494.80 million) and 440 million for the year
Net profit for three months to June was 99 million euros,
compared with a forecast of 123 million by four analysts polled
by Thomson Reuters. Earnings per share were 6.9 euro cent in the
quarter, compared with an average analyst forecast of 9 cents.
Ryanair's shares were down 2.0 percent on a flat Irish
market at 0850 GMT. Rival Air France-KLM was
up 11 percent after halving its operating loss on improved
"The bottom line is that recession and austerity are having
bigger impacts than the market had expected," said Merrion
Capital analyst Gerard Moore.
The airline, which has a lower cost base than many of its
competitors, said it had hedged 90 percent of its fuel needs for
the year to March at approximately $1,000 per tonne. That is up
21 percent on last year, but lower than current market prices.
The cost of the remaining 10 percent will be lower than
expected at the start of the year, but this saving will be more
than offset by a worse euro to dollar exchange rate, the company
said in a statement.
Average fares were up 4 percent, in line with mid-single
digit growth forecast by the airline in May, and were on track
for average growth of around 3 percent in the year to March,
The airline will go ahead with already announced plans to
ground 80 of its 270 planes over the winter due to high fuel
costs, Millar said.
"With oil prices at $100 per barrel it really doesn't make
sense to fly these aircraft," Millar said. "The more you fly,
the more you lose."
However, it sees potential for further increases in capacity
in the key summer season. Its offer for rival Aer Lingus aims to
take advantage of its premium network of airports in Europe
which complements its own lower-cost regional network.
Last week, the European Commission, which acts as EU
competition watchdog, said it would decide by Aug. 29 whether to
clear Ryanair's $841 million bid for Aer Lingus.
Ryanair said it would not comment further.
Poor weather in the United Kingdom boosted sales at budget
rival easyJet Plc in the three months through June,
pushing revenues up by 10.5 percent. Ryanair, has roughly half
as much exposure to the United Kingdom.
Most European carriers continue to struggle with high fuel
costs, weak consumer confidence and the euro zone crisis.