Ryanair chief executive Michael O’Leary has indicated that a disastrous upcoming winter for airlines would play into the low-cost carrier’s hands despite its first annual loss in 20 years.

Published: 03 Jun 2009

Ryanair chief executive Michael O’Leary has indicated that a disastrous upcoming winter for airlines would play into the low-cost carrier’s hands despite its first annual loss in 20 years.

O’Leary, according to a report filed by Reuters, predicted Ryanair’s passenger numbers would rise significantly in the current year, despite the downturn in air travel.

“Next winter could be terrible. We are gearing up for it to be terrible. There will be a bloodbath in the industry, and we want to cause some of that bloodbath,” he told reporters, adding that the outlook for Ryanair was “bloody brilliant”.

Outlook

In fiscal 2009- 10, Ryanair expects to grow traffic by 15 percent to 67m. Significantly lower oil prices has encouraged the airline to restart hedging and Ryanair is now 90 percent hedged for the first three quarters of the coming year at much lower prices than competitors, it said. If oil prices remain at current levels then the airline expects it full year fuel bill will be €450m lower.

“We expect operating costs per passenger (excluding fuel) will also fall by approximately five percent and we intend to use these reductions in both fuel and other unit costs to drive fares materially lower. Lower fares will help Ryanair to grow traffic, maintain high load factors and, despite a deep recession - gain traffic from high fare competitors. While we have limited visibility on bookings we expect that a combination of a deep recession, weaker sterling and our own capacity growth will cause average fares to fall by between 15 – 20 percent this year to as little as €32 per passenger.”

“On the basis of these fuel and yield expectations we currently expect that after tax profits for the coming year will at least double to a range of between €200m to €300m.”

Takeover

O’Leary reportedly said the airline’s growth could one day even enable it to buy Germany’s flagship carrier Lufthansa.

“We are having a serious look at Lufthansa. We could almost buy it for cash,” Michael O’Leary told a news conference in London following Ryanair’s full-year results. “We are not planning any bids for Lufthansa in the foreseeable future, but it is the only one of the other three large airlines that we would be interested in.”

Deutsche Lufthansa AG declined to comment on statements made by Ryanair Holdings PLC.