Ryanair Predicts Declining Earnings In 2012

Ryanair Holdings Plc is predicting that 2012 earnings will be no the decline as the European economy continues to slow and increasing fares fail to make up for the ever increasing cost of jet-fuel.

Net income at Europe’s largest airline increased by 25 percent in the 12 months leading up to March 31, reaching 502.6 million Euros. The company predicts that number will fall to between $400 million and $440 million euros in 2012.

Last winter Ryanair attempted to boost profits by idling 80 aircraft while curbing capacity, that move allowed the company to boost fares by 16 percent on the year while costs rose 13 percent.

The company notes that a slumping economy in 2012 will make it hard for the company to increase prices to offset a $320 million euro jump in its fuel bill.

Chief Financial Officer Howard Millar tells Bloomberg:

“It’s going to be a more difficult ask in the coming 12 months as we see the recession biting across Europe. Spain is a lot weaker, Italy is getting weak and you can’t expect to raise fares forever when you have so much austerity.”

Ryanair shared fell by as much as 6.6 percent on news of the less than stellar expected year while the stock has gained 5.3 percent in 2012, valuing the company at $5.5 billion euros.

While the company is “cautious” about 2012 they also note that less efficient carriers could see even worse results.

Investors in the meantime will be on the lookout for new estimates from the company. Ryanair executives have a tendency to downplay their own fiscal reports and then later upgrade predictions based on “better than expected” results.