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Ryanair attacks Aer Lingus’ staff compensation increases, will appeal the Competition Commission’s preliminary decision to divest its 29.4% share of Aer Lingus

Ryanair (Dublin) is appealing the UK’s Competition Commission’s preliminary decision to force the carrier to divest its 29.4 percent share of rival Aer Lingus (Dublin). The ultra low cost carrier could drag out the decision for at least two years appealing the decision according to The Independent. The Competition Commission ruled in its preliminary ruling that Ryanair exerts “material influence” over Aer Lingus due to this minority share.

The airline issued this fiery statement (as it normally does) in response:

Ryanair on May 30 criticized the UK Competition Commission’s (CC’s) provisional decision that Ryanair, through its 6½ year old minority (29.8%) shareholding in Aer Lingus, “has influence’ over Aer Lingus and that this “could reduce competition”. This unfounded claim is disproven by the European Commission’s recent (February 2013) ruling that competition between Ryanair and Aer Lingus has “intensified” since 2007.

Under EU law, the UK CC has a duty of “sincere cooperation” with the EU, and cannot contradict or reach different conclusions to the European Commission’s findings. Inexplicably, this provisional decision by the CC infringes this duty of sincere co-operation by ignoring the recent findings of the European Commission that:

“Aer Lingus and Ryanair compete on a greater number of routes compared to the 2007 Decision” and “there is significant competitive interaction between the Parties” and “evidence collected by the Commission in the market investigation has also confirmed that the competitive relationship between Ryanair and Aer Lingus has at least persisted, if not increased, since 2007”.

Should the CC maintain this untenable position in its final decision (due in July), Ryanair will appeal that decision to the UK Competition Appeals Tribunal and thereafter, if necessary, to the Court of Appeal. Until the outcome of this UK appeal, and the completion of Ryanair’s appeal against the European Commission’s February 2013 prohibition decision, the CC cannot impose any remedies, however unlawful, on Ryanair.

Ryanair’s Michael O’Leary said:

“This provisional decision by the UK CC is bizarre and manifestly wrong. The CC’s finding that Ryanair’s shareholding obstructs Aer Lingus’ ability to attract other airlines was disproved by Etihad’s purchase of a 3% stake and the evidence submitted by other large EU airlines, which confirmed that Ryanair’s shareholding was not a barrier to other airlines acquiring a stake in Aer Lingus.

In February 2013 the European Commission found that competition between Ryanair and Aer Lingus has “intensified” since 2007. A decision by the Competition Commission that Ryanair’s 29.8% stake in Aer Lingus may lead to a lessening of competition will clearly breach the EU Treaty duty of sincere cooperation between the EU and the UK. Ryanair therefore calls on the Competition Commission to abide by this overriding legal principle and end this bogus and baseless enquiry into a 6½ year old minority shareholding between two Irish airlines.

While Ryanair is one of the UK’s largest airlines, Aer Lingus has a tiny presence in the UK, serving just 6 routes to the Republic of Ireland, a traffic base that has declined over the past 3 years and now accounts for less than 1% of all UK air traffic. This case, involving two Irish airlines where one (Aer Lingus) accounts for less than 1% of the UK’s total air traffic, is yet another enormous waste of UK taxpayer resources on a case which has little if any impact on UK consumers.

UK taxpayer interests would be better served if the UK Competition Commission investigated (rather than ignored) BA’s recent takeovers of BMI, Iberia and Vueling, instead of wasting time pursuing this Irish case, which is of no consequence to UK consumers.”

Read the full report by The Independent: CLICK HERE

Meanwhile to re-emphasize it does not have much control over Aer Lingus, Ryanair issued this scathing statement on recent Aer Lingus employee compensation increases:

Ryanair, a 6½ year old minority shareholder in Aer Lingus on May 31 condemned the spineless Board and Management of Aer Lingus which has accepted the latest crazy Irish Labour Court recommendation that another €170m to €200m of shareholder funds be squandered to compensate Aer Lingus staff for a pension deficit which Aer Lingus has repeatedly assured shareholders is a defined contribution (‘DC’) pension scheme, and for which Aer Lingus has no further liability. If, as Aer Lingus’ IPO prospectus (and every subsequent annual report) confirmed, neither Aer Lingus nor its shareholders have any liability towards this ‘DC’ pension scheme, then why is yet another €170m to €200m being wasted on yet another pay off for Aer Lingus’ staff.

Ryanair pointed out that this is not the 1^st , not the 2^nd, but the 6^th time (in 7 years) that Aer Lingus’ staff have blackmailed the Government and trade union controlled Board of Aer Lingus, to enrich themselves at shareholders expense at a total cost of over €600m and rising as follows:

Aer Lingus post IPO exceptional payments to staff & unions

Year	Payment	Reason
2006	€132m	Pension deficit & ESOT contributions
2008	€138m	Staff restructuring and PCI payments
2009	€89m	Staff restructuring and PCI payments
2010	€55m	ESOT debt & leave/redundancy tax payments
2012	€17m	Staff restructuring payments
2013	€170m – €200m	Pension deficit & employee payments
Total	€600m – €630m

This latest staff grab of €170m – €200m confirms Ryanair’s belief that Aer Lingus cannot be trusted to protect shareholder funds from repeated raids by its unions and staff. Over the past 7 years since Aer Lingus’ flotation, more than €600m in “exceptional payments” has been unjustifiably snatched by staff, while the Board and Management repeatedly promise shareholders that each time would be the “last time”. As recently as September 2011, Aer Lingus CEO Christoph Mueller and CFO Andrew Macfarlane assured shareholders at investor meetings that they would not make “any further contributions to the pension scheme above the current DC rate of 6.375%”. Just 18 months later they both roll over and shell out another €170m to €200m and agree an increased D.C. rate of 10%, thereby increasing Aer Lingus’ cost base, with no benefit for Aer Lingus shareholders.

The recent record of this Government appointed Board of Aer Lingus in safeguarding its shareholder funds from staff grabs is awful, as the following examples demonstrate:

1. Following its 2006 IPO, Aer Lingus made a one off (not to be repeated) contribution of €104m to eliminate its pension scheme deficit on the basis that the scheme would thereafter be a defined contribution (D.C.) scheme and Aer Lingus would have no future obligations for any deficits.

2. In December 2010, when the ESOT (Employee Share Ownership Trust) was unable to service its bank debts, Aer Lingus wrote a cheque (on Christmas Eve) for €26m – without shareholder approval – to pay off the ESOT’s debts, again with no benefit for shareholders.

3. Also in 2010 when the Irish Revenue rejected Aer Lingus’ “leave and rehire redundancy scheme”, which gave rise to employee tax liabilities of almost €30m, the Board and Management again rolled over and paid more than €29m in “exceptional payments” – without shareholders approval – to pay off these personal tax liabilities of Aer Lingus staff.

4. Now in 2013, when the Aer Lingus DC pension scheme has again racked up multi million euro deficits, the unions threaten industrial action, and the spineless Board of Aer Lingus again roll over and splash out between €170m to €200m in pension contributions, pay increases, annual increments and other benefits to Aer Lingus’ staff. This brings to over €600m the exceptional payments made to Aer Lingus staff since the company floated in September 2006.

Ryanair believes that these €600m staff pay-offs over 7 years shows that the Board of Aer Lingus (which is controlled by the Irish Government and trade union bosses) cannot be trusted with shareholder funds. They roll over every time they are threatened. Ryanair believes that Aer Lingus will, with the connivance of the Irish Government, continue to squander shareholder funds every time they are threatened by the vested interests of staff.

Ryanair will vote against this unwarranted and unjustified pay-off of up to €200m to a ‘DC’ pension scheme which Aer Lingus has confirmed it has no liability for. However since Ryanair’s minority stake gives it no influence or control over Aer Lingus it will yet again be voted down by the Government and unions who control and run Aer Lingus. Ryanair believes that this €600m to €630m of exceptional payments to Aer Lingus staff over the last 7 years since its IPO is a scandal which must be exposed and ended. Ryanair calls on the Board of Aer Lingus to stand up for shareholders and resist this industrial relations blackmail by unions and staff.

Ryanair’s Michael O’Leary said:

“How many times are the Board of Aer Lingus going to roll over when their staff and unions threaten industrial action unless they get paid off again and again. The original pension pay-off of €104m in 2006 was sold to shareholders at the IPO on the basis that Aer Lingus would have no obligation to any future pension deficits. Now despite paying over €400m to its staff in exceptional payouts over the last 6 years, yet another €170m to €200m of shareholder funds is to be squandered on paying off a deficit in a D.C. pension scheme and providing for annual increments which don’t exist in any other privately run company! We believe this is blatant mismanagement by a Board which is controlled by, and panders to, Government and unions and does nothing to protect shareholder funds.

This decision is irreconcilable with the repeated assurances given by Christoph Mueller CEO and Andrew Macfarlane CFO at previous investor meetings that Aer Lingus would not make any further one-off contributions to this D.C. pension scheme. Today’s decision (which could only take place in a company that was controlled by the Government and trade unions) is yet another example of how shareholder funds are being squandered to buy off staff again and again. Ryanair will oppose this latest “daylight robbery” of up to €200m, which brings to over €600m the cash that the staff of Aer Lingus have grabbed in exceptional payments since 2006.

Ryanair does not believe that this latest exceptional payout will be the last. The Aer Lingus unions have repeatedly shown that whenever they threaten, the Board and Management will roll over. This will continue while Aer Lingus remains controlled by a Board of Directors which was appointed by and is controlled by the Irish Government and ICTU boss David Beggs and which has presided over wholesale destruction of Aer Lingus’ share price, a six year record of cumulative losses, 3 years of declining traffic and now over €600m in exceptional pay-offs to Aer Lingus’ 3,000 staff or over €200,000 a head. As a public company, Aer Lingus should be run for the benefit of its shareholders and not to repeatedly enrich its 3,000 staff.”

Top Copyright Photo: SM Fitzwilliams Collection/AirlinersGallery.com. Ryanair’s Boeing 737-8AS WL EI-EVF (msn 40291) with “Modlin Jest OK! – Modlin is OK!” sub-titles taxies at the Dublin base.

Ryanair:

Aer Lingus:

Bottom Copyright Photo: SM Fitzwilliams Collection/AirlinersGallery.com. Aer Lingus’ Airbus A319-111 EI-EPT (msn 3054) lands at Dublin.

Ryanair’s 2012 profit rises by 13% to a record $731.3 million

Ryanair (Dublin) has reported on its financial results for 2012. The company issued this statement:

Ryanair, Europe’s only ultra-low cost carrier (ULCC) today (May 20) announced (record) annual profits of €569 million ($731.3 million), up 13% on last year despite higher oil costs. Revenues rose 13% to €4.88 billion as traffic grew 5% to 79.3 million passengers. Unit costs rose 8% mainly due to an 18% (€292 million) increase in fuel. Excluding fuel unit costs rose by 3%, while average fares improved by 6%.

Full Year End (IFRS)	Mar 31, 2012	Mar 31, 2013	% Change
Passengers(m)	75.8	79.3	+ 5%
Revenue(m)	€4,325	€4,884	+13%
Profit after Tax(m) Note 1	€503	€569	+13%
Basic EPS(euro cent)	34.10	39.45	+16%

“Announcing these profits Ryanair’s, Michael O’Leary, said:

The highlights of the past financial year include:-

· Profits grew by 13% to €569m.

· Traffic grew 5% to 79.3m (despite grounding up to 80 winter aircraft).

· 7 new bases – Chania (Greece), Eindhoven (Netherlands), Fez (Morocco), Krakow (Poland), Maastricht (Netherlands), Marrakech (Morocco) & Zadar (Croatia).

· 217 new routes (y/e total over 1,600 routes).

· 15 new aircraft delivered (y/e fleet 305).

· 2nd special div. of €492m and €68m share buyback completed.

· 175 new aircraft order, delivery 2014 to 2018 (sub. to June 18 EGM approval).

Delivering a 13% increase in profits and 5% traffic growth despite high oil prices during a European recession is testimony to the strength of Ryanair’s ultra-low cost model. Fuel costs rose by over €290m, and now represent 45% of total costs. Excluding fuel, unit costs were up 3% due to excessive and unjustified increases in Italian ATC, Eurocontrol and Spanish airport fees. Ancillary revenues outpaced traffic growth, rising 20% to €1,064m or 22% of total revenue.

Growth – New Routes and Bases

This summer Ryanair opened 7 new bases, and more than 200 new routes as we continue our strategy of growing Europe’s largest passenger airline. However with 9 (net) additional aircraft and longer sectors, traffic growth this summer will be very modest at approx. 2%. By grounding fewer aircraft next winter we expect to deliver slightly faster H2 monthly growth which should result in overall traffic growth for the full year rising by more than 2m to 81.5m passengers.

Forward bookings on our new routes and bases this summer are ahead of expectations (albeit at modest yields) as competitor airlines continue to restructure and cut short-haul capacity. We expect growth opportunities for Ryanair to expand and improve for the foreseeable future.

Our new route teams continue to handle more growth opportunities than our current fleet expansion allows. Significant opportunities are opening up in Germany, Scandinavia and central Europe in particular, where Air Berlin, SAS and LOT continue to restructure. We are in active discussions with the new owners of Stansted Airport and the new management at Dublin Airport and while no agreements have yet been reached, if a competitive cost base emerges, then we could restart growth at one or other airports as early as September 2013.

We have also made offers to the Spanish airport monopoly AENA to reverse a significant proportion of its traffic declines over the past two years. In a country where youth unemployment runs at 50%, their policy of increasing airport fees, while traffic declined from over 220m to under 180m over the past six years is plainly ill-judged. As ever, Ryanair remains willing to exploit growth opportunities wherever airports provide attractive incentives to do so.

Market Share Gains

Ryanair continues to expand, making meaningful share gains in many of Europe’s largest markets. In addition to being the No. 1 passenger airline in Ireland, and Spain, we have in the last 12 months overtaken Alitalia and LOT to become Italy’s and Poland’s No. 1 airline, respectively. Ryanair believes that its unique low cost advantage will enable the airline to achieve a 20% share of the European short-haul market over the next 5 years, particularly given that many of Europe’s high fare incumbents are restructuring and cutting capacity.

New 175 Aircraft Order

Ryanair’s successful growth, allied to deep short-haul restructuring among many high fare competitors, gives us confidence that we can grow from 80m p.a. to over 100m passengers p.a. over the next 5 years. Our recent order for 175 firm B 737-800 aircraft represents an enormous opportunity for shareholders as Ryanair returns to higher rates (5% p.a.) of traffic growth. We are pleased to have reached acceptable pricing with Boeing, and the controlled delivery programme from Autumn 2014 to end of 2018 will provide the opportunity to expand Ryanair’s fleet to over 400 aircraft and our traffic to over 100m p.a. Ryanair is now uniquely positioned to offer many of Europe’s airports sustained traffic growth in return for low cost, efficient facilities. I am confident that in time this new order will enable Ryanair to extend its traffic leadership over Europe’s airlines, and generate further returns for our shareholders.

Aer Lingus

We were disappointed that the European Commission in February 2013 decided to prohibit Ryanair’s third offer for Aer Lingus. It is bizarre that the EU can wave through BA’s offer for British Midland in Phase 1 with few remedies, yet months later reject Ryanair’s offer for Aer Lingus which was accompanied by a revolutionary remedies package delivering two upfront buyers to open competing bases in Dublin and Cork airports. We have no doubt that this was yet another politically motivated decision by Europe’s competition authority and it is inexplicable in the context of its stated policy of promoting European airline consolidation.

Having our third offer for Aer Lingus prohibited by the EU Commission on the grounds that “competition between Ryanair and Aer Lingus has intensified since 2007”, our shareholding is now the subject of an even more bizarre regulatory inquiry in the UK where the Competition Commission are reviewing our 6½ year old minority stake in Aer Lingus on the basis that it may have “lessened competition” between Ryanair and Aer Lingus. Given that the UK Competition Commission has a legal duty of sincere co-operation with the EU, we believe they cannot make a contrary finding, and so this spurious and time wasting inquiry into a 6½ year old minority stake between two Irish airlines, one of whom (Aer Lingus) has a tiny presence in the UK market should now be abandoned in the light of the EU Commission’s finding that competition between Ryanair and Aer Lingus has intensified.

Fuel Hedging

In recent years high oil prices and competitor fuel surcharges have made Ryanair’s fares even more attractive to hard pressed European consumers. The combination of high oil prices, increasing competitor losses, together with a shortage of financing for weaker credits, will lead to continued EU consolidation and closures. Ryanair is 90% hedged for FY’14 at $980 per tonne (approx. $98 p.bl) and we have now extended our hedges into FY’15 with 25% of H1 hedged at $930 per tonne (approx. $93 p.bl). We hope to continue to make meaningful reductions in our oil costs into FY’15.

Balance Sheet

Ryanair’s balance sheet remains one of the strongest in the industry. Our aircraft which have been purchased at substantially discounted prices, represents a significant long term benefit for our shareholders. We have gross cash over €3.5bn and year-end net cash of €61m, despite having returned almost €500m to shareholders in November (€1.5bn over the past 5 years) via a second special dividend. We have also taken advantage of current low interest rates to secure almost 70% of our fleet financing all in at under 3% and we have completed our Capex hedging programme to the end of 2014 at Euro/Dollar exchange rate of 1.32.

Outlook

We expect traffic in FY.14 to grow by 3% to 81.5m. Growth will be slower in H1 at approx. 2%, but rise to approx. 5% in H2 as we ground fewer winter aircraft (up to 60) compared to prior years. Unit costs will increase primarily due to rising oil prices, a 3% growth in sector length, and unjustified higher Eurocontrol and Spanish airport charges. Due to lower yields and higher fuel costs Q1 Net Profit will be lower than last year due to the timing of Easter (which boosted Q4 revenues) and its presence in the prior year Q1 comparable. With almost zero yield visibility into H2 and the EU wide recession, we expect that there will continue to be downward pressure on yields which will dampen full year profit growth. We expect modest yield and traffic growth for the full year to be partly offset by higher oil and Eurocontrol costs resulting in another year of profit growth in FY’14 which – subject to winter yield outturns – should increase to a range of between €570m to €600m”.

Copyright Photo: SM Fitzwilliams Collection. In November of 2006 Ryanair added these biting “bye bye Latehansa” markings to this Boeing 737-8AS EI-DLM (msn 33594) pictured landing at the Dublin base. The aircraft has since gone on to Nok Air as HS-DBM.

Ryanair:

Ryanair opens three new bases

Ryanair (Dublin) celebrated the opening this past week of its new bases at Eindhoven, Krakow and Zadar, bringing Ryanair’s European base network to 54, with an additional 3 bases set to open at Chania (Greece), Fez and Marrakech (both Morocco) by the end of April.

Eindhoven is Ryanair’s second Dutch base (following the opening of Maastricht in December) with one-based aircraft and 31 routes, which will deliver up to 1.7 million passengers per year.

Ryanair also opened its second base in Poland at Krakow, with two-based aircraft and 31 routes, which will deliver up to 1.6 million passengers per year.

Zadar, meanwhile, is Ryanair’s first Croatian base, with one-based aircraft and 17 routes, which will deliver up to 300,000 passengers per year.

All AG photos are for sale.

Ryanair:

Ryanair commits for 175 new Boeing 737-800s

Ryanair (Dublin) has committed to purchase 175 new Boeing 737-800s pending the completion of the final contract.

Boeing issued this statement:

Boeing (Chicago) is delighted that Ryanair has announced a commitment to order 175 Next-Generation 737-800s for the airline’s fleet expansion. When finalized, the agreement will be worth $15.6 billion at list prices and will be posted to the Boeing Orders & Deliveries website as a firm order.

“This agreement is an amazing testament to the value that the Next-Generation 737 brings to Ryanair,” said Boeing Commercial Airplanes President & CEO Ray Conner. “We are pleased that the Next-Generation 737, as the most efficient, most reliable large single-aisle airplane flying today, has been and will continue to be the cornerstone of the Ryanair fleet. Our partnership with this great European low-cost carrier is of the utmost importance to everyone at The Boeing Company and I could not be more proud to see it extended for years to come.”

Ryanair CEO Michael O’Leary and Conner will hold a joint press conference today to discuss the announcement at the Waldorf Astoria Hotel (Starlight Roof), 301 Park Avenue, New York, at 10:15 am ET.

Meanwhile Ryanair issued this statement:

Ryanair, Europe’s only ultra-low-cost carrier (ULCC), today (March 19) signed an agreement with the Boeing Company to purchase 175 new Next Generation 737-800 airplanes. When finalized, the deal will be worth nearly $15.6 billion at current list prices, and will allow Ryanair to grow its airline to more than 400 airplanes, serving more than 100 million passengers per year across Europe by the end of the delivery stream in 2018.

The agreement was signed by Ryanair CEO Michael O’Leary and Boeing Commercial Airplanes President CEO Ray Conner in New York (March 19). Upon approval by Ryanair’s shareholders, the purchase will become Boeing’s largest deal to date in 2013 and will be the largest ever aircraft order from a European airline. It will sustain thousands of skilled manufacturing jobs in Boeing and its supplier companies and will represent the largest ever capital investment by an Irish company in U.S. manufacturing and U.S. jobs.

These Boeing airplanes will create more than 3,000 new jobs for pilots, cabin crew and engineers at Ryanair’s growing number of aircraft bases across Europe. Approximately 75 of these new aircraft will replace some of Ryanair’s existing fleet of 305 Boeing 737s, but the remainder will drive new growth of Ryanair’s fleet of young, highly efficient airplanes. These airplanes will allow Ryanair to grow its low-cost airline service by about 5 percent per annum over the next several years, taking Ryanair’s traffic to over 100 million passengers by March 2019.

As Ryanair continues to plan its future as Europe’s low-cost airline leader, it continues to evaluate the benefits of Boeing’s 737 MAX aircraft which enters service in 2017.

Copyright Photo: SM Fitzwilliams Collection. Boeing 737-8AS WL EI-CSB (msn 29917) turns on to the runway at the Dublin base. This airframe has since gone on to VARIG (2nd) as PR-VBB.

Ryanair:

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Ryanair is close to a new major Boeing 737NG order

Ryanair (Dublin) is on the verge of a major order for around 170 current generation Boeing 737 aircraft according to this report by Reuters.

Read the full report: CLICK HERE

Copyright Photo: SM Fitzwilliams Collection. Boeing 737-8AS WL EI-CSY (msn 32779) lands at the Dublin hub. This aircraft was returned to the lessor on November 19, 2008 and is currently with UTair Aviation of Russia operating as VQ-BJG.

Ryanair:

Ryanair to cut its London Stansted hub by 9%

Ryanair (Dublin) in a protest over airport fees has announced it will cut its London Stansted hub by 9 percent. The airline has often used this threat to cut services and jobs to put pressure on airports to lower their fees. The opinionated airline issued this statement over the fee hikes:

Ryanair announced that it will cut its London Stansted traffic by 9% over the coming year (from 12.5 million to 11.4 million) after the Ferrovial/BAA Stansted monopoly announced a further unjustified increase of Stansted’s already high charges of 6% from April 2013, despite the fact that Ferrovial/BAA has sold Stansted to Manchester Airport Group (MAG) who will take over the airport sometime before the end of March.

Ryanair has called on Stansted’s regulator, the CAA, to investigate whether this unjustified and unwarranted 6% price hike was a “sweetener” by Ferrovial/BAA’s sale of Stansted, which raised £1.5 billion in proceeds for Ferrovial, despite the fact that Stansted’s traffic has declined from 24 million per year to 17.5 million per year over the last 6 years.

Ryanair, which had planned to grow its Stansted traffic by 5% from April 2013, will now cut frequencies on 43 of its routes and reduce its weekly operations by over 170 flights, with the loss of 1.1 million passengers (-9%) and over 1,100 jobs at Stansted, in direct response to this unwarranted and unjustified 6% price hike. Ryanair called on the CAA regulator to explain why Ferrovial/BAA is allowed to hike charges by 6% when UK inflation is less than 3% and Stansted’s traffic continues to decline.

Ryanair also called on Ferrovial/BAA to reverse this unjustified and unwarranted price increase before the sale to MAG is concluded and further called on MAG to confirm that it will not permit any further price increases at Stansted unless, or until, the traffic declines of the past 6 years (during which the Ferrovial/BAA monopoly has doubled Stansted’s fees) are reversed.

Copyright Photo: SM Fitzwilliams Collection. Boeing 737-8AS EI-DCD (msn 33562) “Pride of Scotland” turns to depart from Dublin’s runway.

Ryanair:

European Commission intends to deny the Ryanair takeover of Aer Lingus

Ryanair (Dublin) is planning to appeal if it is denied its goal of acquiring rival Aer Lingus (Dublin). The airline issued the following statement today:

Ryanair was notified this morning (February 12) at a State of Play meeting with the EU Commission, that the EU Commission intends to prohibit Ryanair’s offer for Aer Lingus, despite the fact that Ryanair has met every competition concern raised in the EU’s Statement of Objections and during the review process, including providing the EU – at its request – with irrevocable commitments from not one, but two, upfront buyers to eliminate all competitive overlaps between Ryanair and Aer Lingus. IAG has committed that they would take over divestments of Ryanair’s and Aer Lingus’ entire London-Gatwick operations, and Flybe has committed to take over 43 Aer Lingus UK and European routes.

Given that the EU Commission recently approved IAG’s acquisition of BMI at London-Heathrow on the basis of three year commitments, the EU’s claim that it could not be satisfied of IAG’s and Flybe’s commitments to these Irish routes after three years is another example of the EU holding Ryanair to a much higher standard than any other EU airline. Ryanair’s remedies package is unprecedented. For the first time in EU airline history, Ryanair delivered not one, but two, substantial upfront EU airline buyers who have agreed to come to Ireland to compete against a combined Ryanair/Aer Lingus.

Ryanair has today instructed its lawyers to appeal any prohibition decision to the European Courts.

Top Copyright Photo: SM Fitzwilliams Collection. Ryanair accurately predicted the demis of bmibaby but it is not getting its way with Ryanair. Boeing 737-8AS EI-DLN (msn 33595) with the “Bye Bye Baby” banner on the fuselage arrives at the Dublin base.

Ryanair:

Aer Lingus:

Bottom Copyright Photo: SM Fitzwilliams Collection. Aer Lingus’ Airbus A330-301 EI-JFK (msn 086) prepares to depart from the DUB hub bound for its registration namesake, New York (JFK).

Ryanair reports third quarter profits of $24.1 million

Ryanair (Dublin) announced third quarter profits of $24.1 million (€18 million), up $4 million (€3 million) on last year despite an $109 million (€81 million) increase in fuel costs. Revenues rose 15% to $1.3 billion (€969 million) as traffic grew 3% to 17.3 million passengers. Unit costs rose 11% mainly due to a 24% (€81 million) increase in fuel. Excluding fuel third quarter unit costs rose by 4%, while average fares improved by 8%.

Summary Q3 Results (IFRS) in Euro.

Q3 Results (IFRS) €	Dec 31, 2011	Dec 31, 2012	% Change
Passengers	16.7m	17.3m	+3%
Revenue	€844m	€969m	+15%
Profit after Tax	€14.9m	€18.1m	+21%
Basic EPS(euro cent)	1.02	1.25	+23%

Ryanair’s CEO Michael O’Leary said:

“Our Q3 profit of €18m was ahead of expectations due to strong pre-Christmas bookings at higher yields. The 8% rise in avg. fares reflects our improved customer service, record punctuality and the successful roll out of our reserved seating service. Our fuel costs rose €81m, (+24%), slightly less than expected as oil prices increased 22% (from $84pbl) to $102pbl. Excluding fuel, Q3 unit costs rose 4% due to excessive increases in Italian ATC costs, Spanish airport charges, and the strength of Sterling to the Euro. Ancillary revenue performed strongly and rose 24% to approx. €13 per pax.

New Routes and Bases.

Our new routes and bases are performing well in their first winter, although some smaller bases such as Budapest and Warsaw are doing so at very low prices. Our 51st base Maastricht opened in December, and we will open 6 new bases (total 57) from April in Eindhoven, Krakow, Zadar (Croatia), Chania (Greece), Marrakesh and Fez (Morocco). Significant capacity cuts by Legacy and other struggling EU carriers continue to offer us substantial growth opportunities across Europe. We expect further capacity cuts and restructurings in Europe as high fare, loss making carriers struggle to compete with Ryanair’s expansion at low prices. During Q.3 Iberia, AFKLM, Air Berlin, and Lufthansa all announced major restructurings. Both LOT and SAS are seeking further state support while the Swiss charter airline “Hello” has closed. These trends will create more growth opportunities for Ryanair to grow profitably to 120m passengers over the next decade.

Customer Service.

Our industry leading customer service continues to improve as demonstrated by the following YTD milestones:-

· 93% of all Ryanair flights arrived on time (a new record).

· Lost bags have fallen to less than 1 per 3,000 pax.

· We cancel less than 4 flights in every 1,000.

No other EU airline can match Ryanair’s fares or this level of passenger service. The addition of reserved seating to our priority boarding service in 2012 has been very well received and a recent survey of Ryanair’s traffic in Spain (where Ryanair is the largest carrier) highlighted that 22% of our passengers were travelling on business. A survey of 10,000 passengers in December also yielded the following results:-

· 87% were satisfied or very satisfied with their Ryanair flight.

· 93% said they would fly Ryanair again.

· 95% said Ryanair provide excellent value for money.

Ryanair Strengths.

Ryanair’s ex fuel passenger cost of €27 (ytd) is lower than any carrier in Europe. Our average fare of €50 is (by some distance) lower than any other EU carrier. Our tight cost management, at a time when competitor costs are rising faster, will enable Ryanair to expand our price and cost leadership over all other EU airlines for the foreseeable future. The combination of Ryanair’s industry leading costs and customer service, strong cash flows and balance sheet, gives Ryanair a unique platform to deliver its next decade of growth as we target a 20% share of the EU short-haul market by growing to over 120m pax p.a.

Stansted Airport Sale

The sale of Stansted should be completed by the end of Spring. We welcome its purchase by MAG and look forward to working with them (as we do currently in Manchester, East Midlands, and Bournemouth) to grow Stansted’s low fare traffic back over 23m, where it was in 2007 before the BAA monopoly doubled Stansted’s fees. We also welcome the CAA’s announcement that is “minded to” rule that Stansted has market power, and will need effective regulation to protect Stansted users from exploitation by the airport monopoly particularly when “there is evidence to suggest that Stansted is pricing above the competitive level”.

Aer Lingus Update.

Under Irish Takeover Panel rules we are unable in these results to update on our offer to acquire Aer Lingus. Accordingly we are issuing a separate announcement on this matter today.

Ryanair’s CEO Michael O’Leary said:

“Ryanair has submitted a radical and unprecedented remedies package to the EU in support of its offer for Aer Lingus. We believe these remedies address every current Ryanair\Aer Lingus crossover route and all other competition issues raised by the Commission in its Statement of Objections. The remedies involve two upfront buyers each basing aircraft in Ireland to takeover and operate a substantial part of Aer Lingus’ existing route network and short-haul business. This will be the first EU airline merger which will deliver structural divestitures and multiple upfront buyers. We look forward to completing our offer for Aer Lingus subject to receiving approval from the EU competition authorities in early March”.

Hedging & Balance Sheet.

We have recently extended our fuel hedges to 75% of FY 14 at $97pbl and hedges on our fuel exposures at $1.32. At current rates our FY14 fuel cost per passenger will rise by approx. 5%, compared to a 14% increase in FY13.

A 2^nd special dividend of €492m (€0.34 per share) was paid to shareholders in Q3, bringing to €1.53bn the funds returned by Ryanair to shareholders over the last five years. Ryanair’s balance sheet remains one of the strongest in the industry, with closing Q3 gross cash of €3.15bn. We expect the year end net cash to be positive despite directly owning over 70% of our fleet of 305 young Boeing 737-800s.

Outlook.

Our Q3 yields were boosted by stronger pre-Christmas bookings, while lower than expected operating costs delivered slightly better profits than forecast. However Q4 traffic (as previously guided) will drop by approx.400,000 passengers (-3%)below last year’s Q4, due to our grounding up to 80 aircraft which limits the impact of high oil prices, high airport fees at Stansted and Dublin, and seasonally weaker Q4 demand. On the basis of this improved Q3 result, our capacity cuts and limited visibility over Easter bookings and yields, (although we have seen some yield softness in January), we now expect our full year profits to exceed our previous guidance (of €490m to €520m) and rise close to €540m, a 7% increase on last year’s profits despite a 19% increase in our oil costs.

Copyright Photo: Antony J. Best. Boeing 737-8AS EI-CSA (msn 29916) arrivs at the London (Stansted) hub with promotional Scotland stickers.

Ryanair:

Ryanair announces its first new bases out of the European Union

Ryanair (Dublin) today (January 16) announced it will open two new bases in Morocco in 2013, at Fez (Number 56) and Marrakech (Number 57) with a total of three based-aircraft, as Ryanair invests over $210 million in Morocco. Ryanair also announced two new Moroccan airports, at Essaouira and Rabat as it grows its operations in Morocco in 2013 to 60 routes and 8 airports, which will deliver up to 2.5 million passenger per year and support 2,500* “on-site” jobs in Morocco.

Ryanair will grow in Morocco in 2013 as follows:

Fez (new base):

· 1 based aircraft

15 routes
4 new routes: Lille, Nantes, Nimes and St. Etienne
600,000 passengers per year
600* “on site” jobs

Marrakech (new base):

· 2 based aircraft

22 routes
7 new routes: Baden, Bergerac, Cuneo (Italy), Dole (France), Munich, Paris (Vatry) and Tours
1 million passengers per year
1,000* “on site” jobs

Essaouira (new airport):

· 2 routes: Brussels and Marseille

Rabat (new airport):

· 3 routes: Brussels, Paris and Marseille

Ryanair’s new Moroccan routes will begin in April.

* According to Ryanair, ACI research confirms up to 1,000 ‘on-site’ jobs are sustained at international airports for every 1 million passengers.

Ryanair:

Ryanair announces its 55th base at Chania, Greece

Ryanair (Dublin) has announced it will open its first Greek base and the 55^th base in total at Chania in April 2013 with one based aircraft. The ultra low-fare airline unveiled 11 new routes (26 in total), from Chania to Billund, Bremen, Bristol, Eindhoven, Katowice, Marseille, Memmingen, Thessaloniki, Venice, Vilnius and Warsaw. Ryanair is investing over $70 million at Chania.

Chania is the second largest city on the island of Crete and is also the capital of the Chania region. Chania is located the north coast of the island, about 90 miles west of Heraklion which gets most of the traffic to Crete.

Copyright Photo: Keith Burton. Boeing 737-8AS EI-DCL (msn 33806) painted in the Dreamliner promotional colors arrives at the London (Stansted) hub.

Ryanair: