Ryanair 3Q Profit drops, Shares fall on weak Forecasts

Ryanair Holdings Plc posted a substandard quarter and released a poor outlook for the upcoming year. Europe’s largest budget airline said profit in the near future is likely to be smacked by a ‘perfect storm’ of soaring oil prices, weakening consumer confidence and sterling softness.

Profit dropped for the first time in seven consecutive quarters and factors that caused the decline may further take it lower by as much as 50 per cent next year.

Net profit for the quarter ended Dec.31 went down 1 percent to 47.2 million euros ($69.9 million). The carrier however, firmly expanded across Europe, with sales and passenger numbers both justifying the growth. Sales were up 16 percent to 569 million euros ($842.7 million), while the number of passengers rose 21 percent to 12.4 million.

The Dublin-based company noted that its net profit was enhanced by a sale of five Boeing 737-800 aircraft worth 12.2 million euro ($17.9 million). Excluding the sale, quarterly net profit fell 27 percent, as the analysts had expected.

Chief Executive Michael O'Leary repeatedly mentioned Ryanair's forecast that full-year profit would go up 17.5 percent to 470 million euros ($695.6 million), but not without giving emphasis to his fears of a worsening environment from April onward.

“The current outlook for the coming fiscal year is poor,” O'Leary said today. “The European airline sector is presently facing one of these cyclical downturns, with possibility of a perfect storm of higher oil prices, poor consumer demand, weaker Sterling and higher costs at unchecked monopoly airports.”

He also said that markets for 2008-09 were too volatile for an accurate forecast to be made.

Ryanair shares fell 55 cents, or 15 percent, to 3.05 euros, taking the biggest plunge since Jan. 28, 2004. The stock has shed 31 percent this year reducing the company's value to 4.78 billion euros.