Nov 2, 2009, 11:04 GMT
London - Irish budget airline Ryanair Monday reported half-year pre-tax profits of 419.4 million euros (618.4 million dollars) but warned that continued cut-price fares would result in losses for the rest of the year.
The airline said falling fuel costs had boosted profits by 300 per cent in the six months up to the end of September. Results in the same six months last year were just 105.2 million euros.
Ryanair's passenger numbers grew to 36.4 million in the reporting period, an increase of 15 per cent over the same period last year.
In his results statement, Ryanair chief Michael O'Leary threatened to withdraw from talks with Boeing for the proposed acquisition of around 200 new planes if the US producer refused to cut its price.
'We won't continue these discussions indefinitely and have signalled to Boeing that if they are not completed before the year end, then Ryanair will end its relationship with Boeing and confirm a series of order deferrals and cancellations,' he said.
Ryanair said revenue was down by 2 per cent at 1.8 billion euros but results were 'heavily distorted' by a 42-per cent drop in fuel costs compared with the same period in 2008.
The airline said this 'masked' a 17-per cent decline in average fares. Prices would fall 20 per cent over the rest of the year, resulting in losses for the last two quarters, it said.
Unlike other airlines, Ryanair has vowed not to introduce fuel surcharges as a result of high oil prices last year and said it would continue offering low fares throughout the recession.
O'Leary said market conditions were 'still difficult' due to what he called an 'an absence of consumer confidence.'
However, the group would be 'substantially profitable at a time when many of our competitors are losing money, consolidating or going bust,' he said.
Traffic growth was strong 'at the expense of declining average fares,' he said, adding that the weakness of the British pound and rising tourist taxes in Britain and Ireland had hit takings.
Ryanair had won customers from high-fare carriers led by Air France, British Airways and Lufthansa and expected the trend to continue, said O'Leary.
He said he was planning to switch some of Ryanair's winter capacity to 'lower cost countries' such as Belgium, the Netherlands, Italy and Spain due to high airport charges and 'stupid tourist taxes.'
However, he also insisted that the airline remained 'ideally positioned to return to substantial profit growth' as Europe emerged from the economic downturn.
O'Leary said he would consider 'binning growth plans' if he could not agree a deal with Boeing over an order for 200 aircraft due for delivery between 2013 and 2016.
'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,' he 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,' he said.
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