Ryanair Holdings Plc, the low-cost Irish airline whose CEO says he’s considering a charge for toilets, may outperform Europe’s biggest carriers after expanding routes while rivals parked planes.
Air France-KLM Group and British Airways Plc will probably post losses when they report quarterly earnings this week, after profits last year, analysts say. Deutsche Lufthansa AG may break even. Ryanair today reported net income of ¤123 million ($175 million) in the three months through June after a year- earlier loss, though average ticket prices are falling as the tradeoff for outpacing competitors in passenger growth.
Ryanair Chief Executive Officer Michael O’Leary is picking up former full-service travelers as the worst recession in half a century prompts fliers to seek better deals, even from Ryanair. The Dublin-based carrier and EasyJet Plc, Europe’s No 2 discounter, are expanding as the big three slash capacity to cut costs, often adding routes and flights in markets where the larger carriers have shrunk. “The low-cost carriers are like the hyenas of the pack, looking for where the best carcasses are,” says Peter Morris, chief economist at London-based aviation consultant Ascend.
While Ryanair earnings trailed the median estimate from five analysts for profit of ¤143 million, the airline said expansion in countries including Italy and Norway will help it increase the number of passengers 15 per cent this year. “Our successful rollout of new routes and bases demonstrates the fundamental strength of Ryanair’s lowest fares model, which even during deep recessions continues to deliver growth,” O’Leary said in a statement. “We will continue to expand as others fail.” Ryanair increased “ancillary revenue,” the charges for items such as extra baggage, airport check-in and snacks, by 13 per cent in the fiscal first quarter. Average ticket prices dropped 13 per cent as passenger numbers rose only 11 per cent, prompting Ryanair to say full-year profit will be at the low end of its forecasted range of ¤200 million to ¤300 million.