6 February 2002

Ryanair profits soar as BAA counts cost of terror attacks

By Michael Harrison Business Editor

Ryanair, the low-cost Irish airline, yesterday took advantage of a record-breaking rise in third-quarter profits and passenger numbers to tap the market for up to £117m to help fund its recent purchase of 100 new Boeing jets.

Profits for the October to December period rose by 34 per cent to euro32.95m (£20.1m) while passenger numbers were up 30 per cent as the no-frills carrier responded to the events of 11 September with an unprecedented fare promotion. The sharp increase in Ryanair's profits is in stark contrast to the rising losses and falling passenger numbers being reported by full-service airlines. British Airways, which this week reported a £189m third-quarter loss, yesterday reported a 7 per cent decline in traffic in January.

Meanwhile, BAA, the airports operator which runs Heathrow, Gatwick and Stansted, reported a 20 per cent fall in third-quarter profits to £103m after a 10 per cent decline in traffic at its seven UK airports.

Earnings for the October to December period fell from £130m to £103m as the downturn in air travel, particularly on transatlantic routes, led to a 10 per cent drop in passenger numbers.

The Ryanair fares promotion reduced yields by 10 per cent but it still grew operating margins by two percentage points. The shares fell 34.5p to 381p. Ryanair is placing up to 30 million new shares at a price of about euro6.50 each. The offer will be restricted to investors in the UK, Ireland and Continental Europe, where Ryanair is attempting to broaden its shareholder base. As part of the strategy, Ryanair has also decided to ban the purchase of further shares in the company by non-EU nationals from midnight tomorrow.

Mike Hodgkinson, BAA's chief executive, said that despite 11 September, the company was confident that air travel growth would return in the long-term.

However, he said it was not possible to predict the exact course of recovery.

Passenger numbers were down by 6 per cent in December compared with 12 per cent in October and a further small improvement is expected when the January figures appear.

For the nine-month period to the end of September, profits before exceptional items were down by 5 per cent to £441m while passenger numbers across BAA's UK network were 3 per cent lower at 95.7 million.

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