DUBLIN, Ireland - Shares in Ryanair Holdings PLC plummeted Monday after Europe's top no-frills airline reported flat third-quarter profits and warned of tough times ahead because of high fuel costs and fears of a recession.
For the quarter ended Dec. 31, Ryanair said its net profit fell 1 percent to 47.2 million euros ($69.9 million). Sales rose 16 percent to 569 million euros ($842.7 million), while passenger numbers rose 21 percent to 12.4 million, reflecting the carrier's relentless expansion of routes across Europe.
However, Ryanair noted that its net profit included a 12.2 million euro ($17.9 million) boost from the sale of five Boeing 737-800 aircraft. Excluding the sale, quarterly net profit fell 27 percent, in line with analyst expectations.
Chief Executive Michael O'Leary reiterated Ryanair's forecast that full-year profit would rise 17.5 percent to 470 million euros ($695.6 million) — but emphasized his fears of a worsening environment from April onward.
O'Leary said it was "too early to make any accurate forecasts in such volatile markets for 2008-09." But he warned that the airline industry could be hit by higher oil prices, falling consumer demand, a weaker British currency and higher airport charges at Ryanair's biggest hubs, London Stansted and Dublin.
Ryanair shares fell more than 13 percent in the first hour of trade on the Irish Stock Exchange to 3.12 euros ($4.62), a new 52-week low.
Goodbody Stockbrokers in Dublin said O'Leary's forecast "rings alarm bells," but emphasized that Ryanair remained cash-rich and the best positioned among European airlines to exploit a weak market.
O'Leary noted that, in recent years of rising oil prices, Ryanair had benefited from advance contracts on fuel supplies. Those contracts have expired, however, he said.
The best scenario for the April 2008-March 2009 fiscal year would involve flat ticket prices and average fuel costs based on $75 a barrel, O'Leary said, about $14 below their current levels. That could produce a 6 percent gain in net profit to 500 million euros ($740 million).
His "most conservative" forecast — based on oil at $85 a barrel, falling consumer demand and a weakening British pound — suggested net profit could be cut in half to 235 million euros ($347.8 million).
Ryanair said the airline was mulling a fourth-quarter buyback of approximately 200 million euros ($300 million) shares. Analysts noted that Ryanair would be able to buy more shares for its money if it talked down its share price.
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