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Ryanair posts 1st loss on bad investment
By Shawn Pogatchnik |
June 3, 2009, Wednesday
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Print Edition
Print Edition
RYANAIR reported a full-year net loss for the first time yesterday, chiefly because of losses from its investment in rival carrier Aer Lingus.
But Europe's biggest budget airline said lower fuel costs and ruthless price-cutting would keep its aircraft packed and would drive a profit rebound this year despite the challenge of recession at home and abroad.
The Dublin-based carrier said it lost 169 million euros (US$239 million) in the year ended March 31 compared with a 391 million euro profit in the previous fiscal year.
Ryanair shares slumped 9 percent to 3.30 euros in early trade on the Irish Stock Exchange yesterday.
The company said it fell into the red chiefly because of a 222.5 million euro accounting writedown on its 30 percent stake in Aer Lingus, whose stock has fallen 70 percent since its 2006 privatization. Ryanair has pursued two failed takeover bids and expects eventually to swallow its smaller Irish rival.
Accounting rules require Ryanair to record the Aer Lingus stock falls as a loss, even though Ryanair says it has no intention of selling its stake at current depressed prices.
Richard Hunter, an analyst at Hargreaves Lansdown Stockbrokers in London, said Ryanair's stake in Aer Lingus "has proved to be something of an albatross around the company's neck."
Ryanair also suffered a 51.6 million-euro writedown on the value of its fleet, reflecting lower aircraft prices internationally.
But Europe's biggest budget airline said lower fuel costs and ruthless price-cutting would keep its aircraft packed and would drive a profit rebound this year despite the challenge of recession at home and abroad.
The Dublin-based carrier said it lost 169 million euros (US$239 million) in the year ended March 31 compared with a 391 million euro profit in the previous fiscal year.
Ryanair shares slumped 9 percent to 3.30 euros in early trade on the Irish Stock Exchange yesterday.
The company said it fell into the red chiefly because of a 222.5 million euro accounting writedown on its 30 percent stake in Aer Lingus, whose stock has fallen 70 percent since its 2006 privatization. Ryanair has pursued two failed takeover bids and expects eventually to swallow its smaller Irish rival.
Accounting rules require Ryanair to record the Aer Lingus stock falls as a loss, even though Ryanair says it has no intention of selling its stake at current depressed prices.
Richard Hunter, an analyst at Hargreaves Lansdown Stockbrokers in London, said Ryanair's stake in Aer Lingus "has proved to be something of an albatross around the company's neck."
Ryanair also suffered a 51.6 million-euro writedown on the value of its fleet, reflecting lower aircraft prices internationally.
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