Irish low-cost carrier Ryanair Holdings plc, has moderately increased its fiscal 2009 outlook as oil prices continued their slide. It also confirmed that it expects to carry just over 58 million passengers in the fiscal.
Though there was no significant revision of fiscal 2009 guidance, full-year outlook has been raised to breakeven point from the previous breakeven to minus 60 million euros. The projection depends on fourth-quarter oil averaging $100 per barrel.
Ryanair said that most of its third-quarter purchase of oil has been hedged at $124 per barrel, while requirements for the fourth quarter remained un-hedged.
The carrier warned that though it would pay less for oil in the fourth quarter, its reserves may well be eaten up by lower yields as the UK, Irish, and European economies go into recession.
It said that it would respond to negative trends by lowering fares and announced the release of 5 million seats for travel in October, and the first two weeks of November, for just 5 euros one way.
Chief executive officer Michael O'Leary said, "While the recent fall in oil prices is welcome, it won't have much impact on our full year results because we have already hedged Q3 at $124 per barrel and any Q4 fuel savings may be absorbed by lower fares and yields as we stimulate growth in a recession this winter."
O'Leary added, "We believe there will be further airline bankruptcies in Europe over the coming weeks, as more of Europe's non-viable, loss making airlines run out of cash or their credit facilities are withdrawn."
O'Leary pointed out that the carrier's refusal to impose fuel surcharges will mean that though its profitability declines steeply in the current fiscal year, its cost reduction programme and significantly lower oil prices would lead to a return to substantial profitability in the next fiscal year.
The carrier closed Thursday's regular trading on Nasdaq at $26.28, up $1.92, or 7.88%, with a volume of 2.28 million shares.