Ryanair reported today a 24% fall in profits for the first three months of its financial year to June 30th, due to disruption caused by the volcanic ash clouds in April and May. Net income was €93.7m, with a cost of €50m for almost 10,000 flights cancelled in April and May. But excluding these extraordinary costs, net profit rose by 1% to €138.5m. Ryanair kept its forecast for full-year net profit to rise by between 10% to 15% to between €350m and €375m.

CEO Michael O'Leary said fuel costs rose by 34% to €287m due to higher oil prices and a 13% sector length increase. Costs (excluding fuel) rose by just 1% due to unit cost reductions achieved in staff, airport and handling costs. The airline is 90% hedged for the 2011 financial year  at $730 per tonne, and hedged 90% of H1 FY12 at an average of $755 per tonne.

"Our new routes and bases (Malaga and Malta) are performing well. We open our 42^nd base in Barcelona (El Prat) in September (5 aircraft/20 new routes), and our 43^rd in Valencia in November (2 aircraft/10 new routes). We continue to see enormous opportunities to grow our business across Europe as many airports vigorously compete to attract Ryanair’s traffic growth. This aggressive competition between airports has resulted in airport unit costs falling by 8%, and we plan to announce more lower cost routes and bases later this year.

The Irish government’s disastrous €10 tourist tax has caused a continuing collapse in Irish tourism. Traffic at Dublin airport in May fell 15% to just 1.6m, and is on track to fall by a further 3m to just 17m passengers in 2010, down almost 30% from the 23.5m pax. handled in 2008. The Government’s failed policy of gouging tourists with a €10 tax and the DAA monopoly’s policy of increasing charges (by up to 40% in 2010) must be scrapped if this downward tourism spiral is to be reversed. As a direct result of the €10 tourist tax and the DAA’s higher fees, we have cut our winter capacity in Dublin by 15% and have switched these aircraft to other EU countries that have scrapped tourist taxes, lowered airport charges, and returned to tourism growth," O'Leary said.

Goodbody analyst Marina Devitt commented: "Ryanair is sticking with its earlier €350-€375m net profit guidance for this year (excluding exceptionals). It also maintains guidance on pax growth of 11% for FY11 to 73.5m gross pax (pre-volcano disruption) and yield growth of 5-10% for the year (with Q2 guided up 10-15%). Presently, we are forecasting yields up 11% for the year, but Q1 was better than we anticipated. On costs, Ryanair has reiterated its 90% hedge for FY11 fuel at $730/mt and is now 90% hedged for Q112 (from 50%), as well as 90% of Q212 (from 20%, both at $755). It is sticking with guidance on unit costs (up 4% yoy, albeit down 6% on a sector length adjusted basis), whilst we have +3.5%. Our pre-volcano net profit figure currently sits above guidance at €391m and we get good comfort from this statement on the yield progression, while ancillaries also appear to have moved in the right direction. There is a conference call at 2.30pm, which should provide further insight on yield trends into Q2. Please refer to our first glance note out this morning for more details."

Results detail

Summary Table of Results (IFRS) - in euro