Ryanair 'will stay in the black'

Ryanair Holdings Plc Chief Executive Officer Michael O'Leary predicted Europe's biggest discount airline will stay profitable this year as he increases ticket prices and baggage charges to make up for record oil costs.

Ryanair rose the most in two months in Dublin trading after O'Leary said average fares will climb 5 percent, reversing a 1 percent decline last year. Ryanair is eliminating call-center jobs, freezing salaries and boosting check-in fees as higher fuel bills cause the industry's worst losses since 2003.

Ryanair "will be the most resilient during a consumer recession and may even benefit from value-conscience consumers moving to the cheapest price," said Ross McEvoy, an analyst at Bloxham Stockbrokers in Dublin who rates the stock "buy".

The carrier, whose shares are down 38 percent this year, yesterday had its first quarterly loss since 2004 after writing down a stake in Irish competitor Aer Lingus Plc. At least a dozen airlines have failed in the past six months as surging oil prices that reached $135 a barrel combine with slowing economies to erode earnings. O'Leary is adding routes to France, Morocco and Romania and posted a 22 percent increase in passengers in May.

Ryanair rose 6.7 percent to 2.88 euros, the biggest gain since April 1, and was trading at that price as of 11:53 am in Dublin for a market value of 4.22 billion euros.

The Dublin-based carrier, which is largely unhedged on jet fuel, should break even in the 12 months through next March, O'Leary said yesterday. He had previously predicted net income of 235 million euros to 500 million euros.

The new outlook is based on oil at $130 a barrel, as well as the targeted increase in fares described by Bloxham's McEvoy as "better than expected".

Agencies

(China Daily 06/04/2008 page17)