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Dublin - Irish low-cost airline Ryanair on Monday reported first half profits due to lower fuel costs but warned that falling fares would mean losses in the second half.
Ryanair chief executive Michael O'Leary described market conditions in Ireland and Europe as "difficult", with the effect of weak consumer confidence exacerbated by "misguided" tourist taxes in Britain and Ireland "levied on air passengers but not on competing ferry or train journeys".
He urged the British and Irish governments "to scrap these stupid taxes and reduce airport charges," warning that Britain faced a nearly 10% decline air traffic and Ireland a 15% fall.
Net profit at Ryanair nonetheless shot up 80% to €387m ($570.8m) between April and the end of September, the first half of its financial year, compared with the same stretch in its previous fiscal period, the carrier said in a results report.
"Ryanair's ability to grow both traffic and profits during the half year is a testament to the strength of Ryanair's lowest fare model, and our relentless cost discipline," Leary said in the statement.
"However these results are heavily distorted by a 42% fall in fuel costs, which has masked a significant 17% decline in average fares.
"We expect average fares to decline by up to 20% during quarters three and four, which will result in both these quarters being loss-making."
Despite the expected losses, O'Leary said the forecast for the full year was "substantially profitable, at a time when many of our competitors are losing money, consolidating or going bust."
O'Leary had some crisp advice for British Airways counterpart Willie Walsh, who he said had "not been radical enough" in dealing with BA personnel.
"I am shocked to read that crew meals on BA cost £6.5m a year," he told BBC News, noting that BA wants to cut that cost to £2.5m.
"Why don't BA crews pay for the whole bloody meal and then save the entire £6.5m and pass it on to hard-pressed BA customers in the form of lower fares? The days of rich fat cat employee deals are over."
O'Leary maintained that at Ryanair "we pay our people very well but they work hard, they buy their own meals, which is what everybody should do, and that's why we are able to pass on cheap airfares... for the travelling public."
Rynair posted an annual net loss of €169m for its last financial year, blaming a 59% surge in fuel costs because of record high oil prices as well as a large writedown on its stake in Aer Lingus.
Revenues dipped 2% to €1.8bn in the first half of the 2009-2010 fiscal year.
But the carrier said it was "well positioned" to benefit from global economic recovery as a result of its growth strategy.
"Ryanair remains ideally positioned to return to substantial profit growth as Europe emerges from this economic downturn," O'Leary said.
He added that Ryanair could cancel or delay planned orders for 200 Boeing aircraft if negotiations with the US jet giant were not completed by the end of the year and that surplus cash could be given to shareholders.
"We see no point in continuing to grow rapidly in a declining yield environment, where our main aircraft partner is unwilling to play its part in our cost reduction programme by passing on some of the enormous savings which Boeing have enjoyed both from suppliers and more efficient manufacturing in recent years," O'Leary said.
"We would prefer to grow, but if Boeing doesn't share our vision, then I believe that Ryanair should change course before the end of this fiscal year and manage the airline over the next three years to maximise cash for distribution to shareholders."
- AFP
