Irish budget airline Ryanair posted its first full-year loss in two decades after writing down its investment in Aer Lingus and its shares dipped 2 percent on Tuesday as its outlook disappointed.
Before booking a loss on its stake in the former Irish state carrier, Ryanair's adjusted full-year net profit of EUR105 million euros (USD$149 million) came in well ahead of expectations and it said it planned to at least double that this fiscal year, in contrast to shrinking rivals.
But investors focused on its 2009-10 outlook, which was less ambitious than expected.
"The numbers for the year just finished are obviously ahead of market expectations but the guidance he has given for March 2010 seems to be below what analysts had thought in their models up till now," a Dublin-based trader said.
"Basically we had been looking for net profit of somewhere around the high 300s and now (Michael) O'Leary is guiding somewhere between 200 and 300 so there is EUR100 million of a difference somewhere along the line."
Adjusted net profit for Europe's biggest low-cost carrier for the year to the end of March was above analysts' forecast.
However, after writing down EUR222.5 million for the fall in the value of its stake Aer Lingus, a former takeover target, and EUR51.6 million for accelerated depreciation on aircraft disposals, Ryanair made a net loss of EUR169 million.
But unlike struggling competitors, Ryanair is confident of mopping up new business as cost-conscious customers seek cheap travel options.
"In this recessionary environment we intend to continue to offer European consumers... better value just like Aldi, Lidl, IKEA and McDonald's are doing in their respective industries," chief executive Michael O'Leary said in a statement.
By contrast, British Airways has said tough conditions made it impossible to give guidance and it was facing a "fight for survival".
PASSENGER NUMBERS
Ryanair increased its passenger numbers by 15 percent in 2008/09 to 58.5 million and plans to grow that further to 67 million this year by cutting average fares by between 15 and 20 percent, it said.
While Aer Lingus has repeatedly warned in recent months of risks to its long-term viability, Ryanair said its EUR2.3 billion cash pile was still rising.
"All of our major competitors have reported material reductions in short-haul capacity and traffic," O'Leary said. "Ryanair will continue to lower fares to stimulate traffic growth, maintain high load factors and win more short-haul traffic from our high fare competitors."
Executives said on Tuesday Ryanair remained interested in Aer Lingus but a third bid was ruled out for years unless prompted by the Irish government, Aer Lingus' second biggest shareholder after Ryanair.
"Ryanair has one of the best balance sheets in the industry and has by far the lowest cost base which should be down another 20 percent including fuel in full-year 2010," Davy analyst Stephen Furlong said. "Ryanair will be the key winner from this recession."
