Ryanair concerns

It is up, up and away for Ryanair or at least it should be.  Europe's largest airline in terms of passengers carried has raised its earnings for the third time in as many months.  It now expects to make up to €850m profit for the year ending in March. That is up from a previous maximum of €830m.

The Irish airline says that it is largely thanks to lower costs and a 25% increase in bookings.

The ‘fly in the ointment’ is the cost of fuel.  Ryanair has never asked passengers to pay a fuel supplement, but its full hedging policy may come back to bite it.  Some airlines are able to lower fares thanks to falling oil prices.  But Ryanair is not benefitting because of hedging. It agreed a fixed price of US$92 a barrel prior to the recent falls.  That is almost double the current cost and it is stuck with the deal until March 2016.  Rival airline easyJet has also hedged on fuel and whilst the figure has not been published it is thought to be in the low US$80s.   www.ryanair.com

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