Ryanair posts first loss in 20 years

Ryanair posted its first full-year loss in two decades and disappointed investors with its outlook today, despite the Irish carrier being one of the few airlines forecasting a profitable year ahead.

While rivals shrink in the face of falling demand, Ryanair is hoping to mop up business from cost-conscious travellers during the global recession, and its chief executive said it was even casting the slide rule over Deutsche Lufthansa.

"We are having a serious look at Lufthansa. We could almost buy it for cash," Michael O'Leary told a news conference in London.

"We are not planning any bids for Lufthansa in the foreseeable future but it is the only one of the other three large airlines that we would be interested in."

Shares in Lufthansa, whose market capitalisation of around 4.5 billion euros is 800 million less than Ryanair's value, were up 2 percent at 10.25 euros at 1100 GMT.

Ryanair was trading up 0.3 percent, underperforming a 5 percent stronger Irish market after its 2009-10 outlook was less ambitious than expected.

"The numbers for the year just finished are obviously ahead of market expectations but the guidance he has given for March 2010 seems to be below what analysts had thought in their models up till now," a Dublin-based trader said.

"Basically we had been looking for net profit of somewhere around the high 300s and now (Michael) O'Leary is guiding somewhere between 200 and 300 so there is 100 million of a difference somewhere along the line."

Europe's biggest low-cost carrier wrote 222.5 million euros off its near 30 percent stake in Irish airline Aer Lingus, resulting in a net loss of 169.2 million euros.

Before booking the loss, Ryanair's adjusted full-year net profit of 105 million euros ($149 million) came in well ahead of expectations and it said it planned to at least double that this fiscal year.

By contrast, British Airways has said tough conditions made it impossible to give guidance and it was facing a "fight for survival".

PASSENGER NUMBERS

Ryanair increased its passenger numbers by 15 percent in 2008/09 to 58.5 million and plans to grow that further to 67 million this year by cutting average fares by between 15 to 20 percent, it said. While Aer Lingus has repeatedly warned in recent months of risks to its long-term viability, Ryanair said its 2.3 billion euro cash pile was still rising.

"All of our major competitors have reported material reductions in short-haul capacity and traffic," O'Leary said. "Ryanair will continue to lower fares to stimulate traffic growth, maintain high load factors and win more short-haul traffic from our high fare competitors."

Executives said on Tuesday Ryanair remained interested in Aer Lingus but a third bid was ruled out for years unless prompted by the government, Aer Lingus' second biggest shareholder after Ryanair.

"Ryanair has one of the best balance sheets in the industry and has by far the lowest cost base which should be down another 20 percent including fuel in full-year 2010," Davy analyst Stephen Furlong said. "Ryanair will be the key winner from this recession."