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Ryanair Reveals £15.4m Q3 Profit, And Issues Bullish Statement on Aer Lingus Takeover Bid 'Completion'

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RYANAIR REVEALS 15M PROFIT
Ryanair produces strong results for its Q3 and claims the takeover bid for Aer Lingus will be completed in March | Alamy

Low-cost carrier Ryanair has reported a €18 million (£15.4m) profit for the third quarter, despite fuel costs rising by more than £69m in the past 12 months.

Overall unit costs for the airline rose 11% over the same period, mainly due to a 24% rise in fuel, but Ryanair was able to offset some of this with an 8% rise in seat prices.

Passenger numbers were up 3% in December 2012, compared to December 2011. Six new destinations are to be opened in 2013; Eindhoven, Krakow, Zadar (Croatia), Chania (Greece), Marrakesh and Fez (Morocco), taking Ryanair's total number of bases to 57.

Business analyst at Company Watch Nick Hood told the Huffington Post UK: "The budget airline model certainly seems to be working well, especially in Northern Europe, possibly reflecting a shift by cost-conscious travellers to the no frills option. After last week's excellent results from rival EasyJet, Michael O'Leary has now pulled off the seemingly impossible trick of raising fares in the face of such deeply depressed economic conditions.

"The added bonus is that the extra revenue boosts the bottom line profits with virtually no cost dilution, given the price gouging on extras that Ryanair imposes on passengers with such evident pleasure. The airline's financial muscle is evident from a balance sheet, which oozes quality from every ratio and which must be the envy of almost all of its full price rivals.“

Separately, Ryanair is continuing in its pursuit to takeover rival Irish airline Aer Lingus. Ryanair already owns 30% of Aer Lingus and has been bidding for the rest of the low cost carrier since the summer of 2012.

A previous takeover attempt in 2006/7 was rejected by regulators but Ryanair said consolidation and the economic downturn had since left Aer Lingus "exposed as a small and uncompetitive airline". A second bid in 2009 was also dropped.

In August 2012, the European Commission announced its intention to launch an in depth investigation into concerns about that allowing the takeover could harm competition.

During an earlier bid offer in 2007, the Commission told Ryanair that its proposal to let go of take-off and landing slots at Dublin airport as a compromise for taking over Aer Lingus wouldn't be enough to make sure there was enough competition, because it didn't believe other airlines would step in to fill the gaps.

Ryanair is understood to have approached at least six airlines – Air France-KLM, EasyJet, Etihad Airways, Flybe, International Airlines Group and Virgin Atlantic – asking them to consider providing services on some of the routes jointly operated by it and Aer Lingus, but the response was muted.

In October 2012, Ryanair said it would move some of Aer Lingus's planes to continental Europe to operate non-Irish routes to allay concerns about a near monopoly in the domestic market, and would scrap some of its own routes from Ireland to persuade regulators to drop a previous merger rejection.

This plan to sell Aer Lingus routes to two separate airlines appears to meet all of the concerns raised by competition authorities, according to chief executive Michael O'Leary's statement on Monday.

He said: "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's 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."

Finally, in other airline news, EasyJet has confirmed chairman Sir Michael Rake is to step down in the summer. Sir Michael leaves after three successful years at the low cost airline to concentrate on his other non executive roles.

Media reports have pointed to his other chairmanship at BT as the reason behind his departure, as the increasingly successful EasyJet approaches FTSE 100 territory. Corporate governance guidelines say individuals should not operate as chairman at more than one FTSE 100 company at any one time.

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