DUBLIN/LONDON (Reuters) - Irish airline Ryanair on Monday raised its full-year outlook to a profit due to lower fuel costs, and forecast further substantial profit next year as travellers trade down in the recession.
Europe’s largest low-cost carrier said its full-year guidance was for a net profit in the 50 million to 80 million euros range versus an earlier projection of break-even, despite a 101.5 million euro (89.9 million pound) loss in the third quarter to end December.
“We’re not satisfied with a loss in the third quarter but we are happier with the outlook ... after a modest profit this year we expect a return to more substantial profit next year,” Deputy CEO Michael Cawley told Reuters in an interview.
Ryanair shares were up 4.5 percent at exactly 3 euros a share by 9:49 a.m., valuing the carrier at 4.4 billion euros.
It followed an increase in profit forecasts last month by rival low-cost operator easyJet, while pricier carriers British Airways and Air France-KLM both issued profit warnings.
“The longer and deeper this recession, the better it will be for the lowest cost producers in every sector,” Chief Executive Michael O’Leary said in a statement.
Ryanair’s third quarter loss was a result of a fuel hedging strategy that saw it lock in fuel costs at over $1,100 a tonne as oil prices fell, but Cawley said it had hedged 75 percent of its fuel in the first half of 2009/10 at $660 tonnes.
“This is well ahead of most of the competition,” Cawley said, adding that if the $660 price was maintained the airline could save 500 million euros from its fuel bill this year.
The group’s third quarter adjusted net loss of 101.5 million euro compared with a 35 million euro profit a year ago and a forecast for a 106.8 million euro loss according to the average of two analysts on Reuters Estimates.
Ryanair expects fares to fall by over 10 percent next year, or more if the recession deepens, it said, adding that it does not expect to give precise earnings guidance for 2009/10 until the fare outlook becomes clearer.
Ryanair, which last month withdrew its latest bid for rival airline Aer Lingus after its was rejected by the Irish government, said it doubted it would make another offer for its neighbour at Dublin airport.
Reporting by Andras Gergely; Editing by Erica Billingham and Hans Peters