Ryanair to ground planes over high fuel costs

21 May 2012

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21 May 2012 | Adam Leach

Low-cost airline Ryanair will “ground” up to 80 of its planes next winter in response to higher oil prices and lower passenger numbers, its CEO Michael O’Leary has said.

In the company’s full year results, published today, O’Leary explained that fuel costs at the airline had gone up 30 per cent for the year, totalling €360 million (£291 million). He said increased prices and other high charges made it logical to reduce the number of planes in use.

“These higher oil prices next winter and the refusal of some monopoly airports, most notably Dublin and Stansted, to lower winter charges makes it more logical to ground up to 80 aircraft rather than suffer losses flying at very low winter yields in 2013,” he said.

Despite the significant rise in fuel costs for the company, it performed strongly in 2011. In fact, it attributed a significant degree of its record €503 million (£406 million) profit to higher costs hitting competitors harder. The results cited airlines such as Malev (Hungary), Spanair (Catalonia), and Climber Sterling (Denmark) as competitors that closed as a result of the costs and said it had responded “tactically” with moves such as establishing a new base in Budapest.

O’Leary expects further closures next year. “We expect more European failures in 2012, as higher oil prices and recession continues to expose failed airline models as well as subscale or peripheral carriers,” he said.

For the year ahead, the company forecast lower profits caused by continuing price rises and a reduction in passenger numbers as a result of ongoing austerity measures across Europe.

Earlier this month, British Airways owner IAG reported that its fuel bill for the first quarter of this year had gone up to €1.41 billion (£1.14 billion), a rise of 24 per cent compared with the same period the year before.

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