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Last Updated: Tuesday, 5 June 2007, 18:47 GMT 19:47 UK
Ryanair profit growth 'to slow'
Ryanair plane
Ryanair says it will keep up its price war in order to attract travellers
Ryanair, Europe's biggest budget airline, has warned that profit growth will slow because of higher airport taxes and duties on passengers.

The news sent Ryanair's shares almost 8% lower, and came as the company reported record profits for the year running to the end of March.

Ryanair announced that its annual post-tax, adjusted profit jumped 33% to 401.4m euros (272m; $542m).

However, it warned growth would slow to 5% in the current financial year.

The airline urged shareholders to remain "cautious and conservative".

Ryanair's shares ended Tuesday trading down 7% to 5 euros.

'Abject failure'

Ryanair's chief executive Michael O'Leary told the BBC that a number of factors had combined to slow earnings growth.

Mr O'Leary complained that "swingeing price increases imposed at Stansted airport, where costs have doubled since April", and higher air passenger duties (APD) were having a negative impact on demand.

This remains an extremely volatile and cyclical business
Ryanair

The company also singled out Dublin airport for criticism, accusing both it and Stansted of imposing unjustified price increases while providing substandard service and facilities.

"These monopoly price increases demonstrate again the abject failure of aviation regulators in both Ireland and the UK to protect the interests of consumers," Ryanair said.

The airline added that it would continue to press for the break up of BAA, the company that runs the UK's biggest airports, including Heathrow, Gatwick and Stansted.

Passenger spending

Despite the problems, Ryanair has benefited from its decision to start charging customers for every bag that they check in, and for services such as priority boarding.

Ryanair said that its average fare per customer rose by 7% in the 12 months to the end of March, while its total traffic figure climbed by 22% to 42.5 million people.

The company added that its ancillary revenues increased by 40% over the past financial year "thanks to better passenger spend, increased penetration, and the growth of excess baggage revenues".

Even so, Ryanair warned that forward bookings and yields would be under pressure, and it planned to continue its "price war".

"This remains an extremely volatile and cyclical business," Ryanair said.


SEE ALSO
Ryanair buys 27 new Boeing planes
31 May 07 |  Business
Ryanair sees profits soar by 30%
05 Feb 07 |  Business
Air tax increase comes into force
01 Feb 07 |  Business
Aer Lingus rejects Ryanair's bid
03 Nov 06 |  Business
Minister renews airline criticism
05 Jan 07 |  UK Politics

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