Ryanair warns of fares hike as profits surge

May 23, 2011, 14:44 GMT

London - Budget airline Ryanair Monday predicted a rise in air fares to compensate for higher fuel prices as it announced a 26-per-cent rise in profits for the last financial year.

The airline said profits reached 319 million euros (449 million dollars) in the year to March 31, as passenger numbers rose by 8 per cent to 72 million. The company's fuel bill increased by 37 per cent to 1.2 billion euros, according to the results.

During the reporting period, 14,000 flights were cancelled due to adverse weather conditions and the widespread disruption of European air traffic because of the Icelandic volcanic eruption in April 2010.

The Irish carrier, which has a fleet of 272 planes, expects traffic to grow by a further 4 per cent to 75 million passengers in the year ending March 2012.

Ryanair chief executive Michael O'Leary predicted that more airlines would 'go broke' due to higher oil prices in 2011. He expected no growth for Ryanair in the second half of the new financial year.

In view of an anticipated drop in passenger numbers in the winter months, the airline would ground about 80 planes during the second half of the financial year, including 50 new jets due to be delivered by Boeing.

'The aim is to lose less money in the winter months,' said O'Leary. However, new 'growth opportunities' would be created as more airlines would fold.

'Higher oil prices will force competitors to continue to increase fares and fuel surcharges which makes Ryanair's lower fares even more attractive,' he said.