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Ryanair warns of loss next year Ryanair warns of loss next year
(30 minutes later)
Ryanair has warned it could make an annual loss of up to 60 million euros (£47.4m) if oil prices stayed high and it continued cutting fares.Ryanair has warned it could make an annual loss of up to 60 million euros (£47.4m) if oil prices stayed high and it continued cutting fares.
The budget carrier said net profits in the three months to the end of June had fallen by 85% to 21m euros - below analysts expectations.The budget carrier said net profits in the three months to the end of June had fallen by 85% to 21m euros - below analysts expectations.
And it added that it was yet to fully hedge the price it paid for oil.And it added that it was yet to fully hedge the price it paid for oil.
Ryanair's downbeat predictions saw its shares fall 15% while British Airways slipped back 4.7% and Easyjet lost 10%.
Oil issues
The soaring price of jet fuel, combined with customers cutting back on flying, has seen many airlines struggle.The soaring price of jet fuel, combined with customers cutting back on flying, has seen many airlines struggle.
The outlook for the remainder of the fiscal year, which is entirely dependent on fares and fuel prices, remains poor Michael O'LearyChief executive, Ryanair Check Ryanair shares
Chief executive Michael O'Leary said that Ryanair expected to break even at best in the year to March 2009, although he warned the company could lose up to 60m euros.Chief executive Michael O'Leary said that Ryanair expected to break even at best in the year to March 2009, although he warned the company could lose up to 60m euros.
This compares with a profit of 480.9m euros in the previous year.This compares with a profit of 480.9m euros in the previous year.
'Poor outlook'
Ryanair's fuel bill now represents almost 50% of its operating costs, compared with 36% last year.Ryanair's fuel bill now represents almost 50% of its operating costs, compared with 36% last year.
Oil hit $147 a barrel earlier this month - though recently it has fallen back to close to $130.Oil hit $147 a barrel earlier this month - though recently it has fallen back to close to $130.
The airline said that the recent fall in prices had been used to hedge 90% of its fuel needs for September at $129 per barrel and 80% for the third quarter at $124 per barrel.The airline said that the recent fall in prices had been used to hedge 90% of its fuel needs for September at $129 per barrel and 80% for the third quarter at $124 per barrel.
However it was still liable for the full cost of oil in the fourth quarter.However it was still liable for the full cost of oil in the fourth quarter.
'Poor outlook'
Full fares were likely to fall by 5% as it battled for customers amid plunging confidence, it added.Full fares were likely to fall by 5% as it battled for customers amid plunging confidence, it added.
"The outlook for the remainder of the fiscal year, which is entirely dependent on fares and fuel prices, remains poor," Mr O'Leary said."The outlook for the remainder of the fiscal year, which is entirely dependent on fares and fuel prices, remains poor," Mr O'Leary said.
He said it would look to maintain "aggressive pricing" in order to maintain high plane usage and would avoid fuel surcharges.He said it would look to maintain "aggressive pricing" in order to maintain high plane usage and would avoid fuel surcharges.
Earlier this month, Ryanair said it would cut about 250 flights from Stansted this winter as it tries to offset the increased oil prices.Earlier this month, Ryanair said it would cut about 250 flights from Stansted this winter as it tries to offset the increased oil prices.
And its rival Easyjet has said that it will cut flights over the winter to offset a challenging economic climate and the high fuel prices that have dented profit growth.And its rival Easyjet has said that it will cut flights over the winter to offset a challenging economic climate and the high fuel prices that have dented profit growth.