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Ryanair Holdings Plc's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Stocks in this article: RYAAY

The traffic growth in Q1 was flattered by the air space, the volcanic ash airspace, closures in April and May last year, which caused the cancellation of 9,500 flights and the loss of almost 1.5 million Ryanair passengers. So our 18% traffic growth combined with an 11% rise in average fares led to a 29% increase in revenues. Significantly higher revenues were largely offset by higher costs, principally fuel, which rose 49% to EUR 427 million. Despite essentially higher fuel costs, we still recorded profit after tax of EUR 139 million, slightly up on Q1 of last year. Our robust result is testimony to the strength of the Ryanair lowest fares, lowest cost model.

Ancillary sales grew 22% to EUR 248 million, somewhat faster than traffic and amounted to 21% of total revenues. We've recently started trials of reserved seating for the 21 extra legroom seats on selected routes for a fee of EUR 10 per seat. And if these trials are successful, particularly during the peak period, we'll roll out reserved seating across more of our longer routes in the network this winter.

Unit costs increased 14%, primarily fuel account for biofuel, which increased 49% to EUR 427 million. Excluding fuel, sector length adjusted they fell 1% as we rigorously controlled costs despite a 2% increase in basic pay for all staff from early April at Eurocontrol charge, which rose 34% in the quarter and substantially higher and adjusted by the airport charges at Dublin Airport, which largely accounted for the 31% increase in airport fees.

Our new routes and bases at summer are performing well. We recently announced a 45th base in Manchester, which starts in October with 2 aircraft and 17 routes, rising to 4 aircraft and 26 routes in summer 2012. A combination of recession and competitive capacity cuts continues to create significant growth opportunities across Europe as numerous airports aggressively compete against each other to attract Ryanair's growth. We expect Dublin Airport's traffic to fall in 2012, which will be its fourth consecutive annual fall due to the DAA monopolies on a justified 40% increase in airport charges. This has led to winter capacity cut by Ryanair and many other airlines. And we believe we'll see traffic again, as I said, for day 2011 fall again at Dublin.

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