Ryanair reports strong third quarter with after-tax profits up 21%
By Finfacts Team
Jan 28, 2013 - 8:56 AM

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Ryanair has reported strong third quarter results with after-tax profits at €18.1m -- a 21% increase on the same time last year. The airline raised its profits outlook for the full year.

The increase in quarterly profits in the three months from October to December was achieved despite an €81m rise in fuel costs as the price of oil rose by 22% from $84 a barrel to $102.

Revenues rose 15% to €969m as traffic grew 3% to 17.3m passengers. Unit costs increased 11% mainly due to a 24% (€81m) increase in fuel. Excluding fuel Q3 unit costs rose by 4%, while avg. fares improved by 8%.

Ryanair’s CEO Michael O’Leary said: “Our Q3 profit of €18m was ahead of expectations due to strong pre-Christmas bookings at higher yields. The 8% rise in avg. fares reflects our improved customer service, record punctuality and the successful roll out of our reserved seating service. Our fuel costs rose €81m, (+24%), slightly less than expected as oil prices increased 22% (from $84pbl) to $102pbl. Excluding fuel, Q3 unit costs rose 4% due to excessive increases in Italian ATC costs, Spanish airport charges, and the strength of Sterling to the Euro. Ancillary revenue performed strongly and rose 24% to approx. €13 per pax."

Michael O’Leary added in respect of the takeover offer for Aer Lingus: “Ryanair has submitted a radical and unprecedented remedies package to the EU in support of its offer for Aer Lingus. We believe these remedies address every current Ryanair\Aer Lingus crossover route and all other competition issues raised by the Commission in its Statement of Objections. The remedies involve two upfront buyers each basing aircraft in Ireland to takeover and operate a substantial part of Aer Lingus’ existing route network and short-haul business. This will be the first EU airline merger which will deliver structural divestitures and multiple upfront buyers. We look forward to completing our offer for Aer Lingus subject to receiving approval from the EU competition authorities in early March.”

Results detail

Stephen Furlong and Joshua Goldman of Davy commented:

Very strong Q3: net income €18.1m (+21%) as yields rise 8%

  • Q3 net profit of €18.1m (up 21% yoy; consensus -€5m, Davy -€26.2m). Q3 revenues increased by 15% to €968.8m (consensus €911m, Davy €880.8m), driven by an 8% increase in yields and a 3% rise in passenger numbers. Ancillary revenues rose by 24% due to the combination of an improved product mix, roll-out of reserved seating and higher internet-related revenues. Unit costs ex-fuel rose by 4% due to Italian ATC costs, Spanish airport charges and the strength of sterling (likely impact of c.1%, with closer to 2% benefit on the yield front). Total unit costs were up 11%, driven by a fuel increase of 24%, leading to operating margins down 1 point to 18%. The primary driver for beating forecasts was improved revenue, helped by market capacity discipline, product (punctuality etc) and roll-out of reserved seating;
  • Cash generation and the balance sheet continue to be very robust with €1.53bn of cash returned to shareholders over the last five years, gross cash of €3.15bn and the expectation of a net cash position at year-end. Fuel hedging has been extended to almost 75% (previous 50%) of FY14 at $97 per barrel and hedged on its fuel exposures at $1.32. At current rates, the fuel cost per passenger would rise by c.5% compared to a 14% increase in FY13. We estimate that this would require a modest low-single-digit percent yield increase to offset.

Best returns in the industry; net profits now close to €540m

  • FY guidance has been raised to close to €540m (consensus c.€535m, Davy €505m) from €490-520m. This is a 7% increase on last year's profits despite a 19% rise in oil costs. Ryanair is indicating that Q3 yields were boosted by stronger pre-Christmas bookings, while lower-than-expected operating costs delivered slightly better profits than forecasts. Capacity in Q4 will drop c.3%, and there is limited visibility over Easter bookings and yields (although the group has seen some yield softness in January). We will up our profit forecast to close to €540m (c.37.2c) this year and €600m (c.41.4c) next year from €550m (38.2c).
  • Ryanair remains by some distance the lowest-cost producer in the industry. Its balance sheet and cash flows allow it to target a c.20% share of the EU short-haul market by growing to over 120m passengers per annum. The Stansted airport sale should provide part of that platform. We also note that 22% of its Spanish passengers are travelling on business. We reiterate our 'Outperform' rating as Ryanair continues to produce the best returns in the industry.

Summary Q3 Results (IFRS) in Euro.


Q3 Results (IFRS) €

Dec 31, 2011

Dec 31, 2012

% Change









Profit after Tax




Basic EPS (euro cent)




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