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Ryanair profits keep leaping

Airline sees huge jumps in online revenue and profits

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Ryanair, the low-cost airline that has seen enormous success on the back of its Internet-oriented strategy, has seen Q1 profits jump 28 per cent year-on-year.

The company flew 2.4 million passengers during its most recent quarter, 42 per cent higher than Q1 last year. Revenue increased by 31 per cent to £93.3 million and profit was up 28 per cent to £14.35 million.

Unusually, chief exec Michael O'Leary didn't herald the company's Web site and Internet effort as the reason behind its continued success. Instead, he concentrated on pointing out that the increase was achieved despite a downturn in the airline market and an increase in costs.

Ryanair had cancelled several options on new 737s from Boeing and threatened to cancel more for 2004/5 unless the aircraft manufacturer lowered its prices, or "unless their pricing begins to reflect the current market realities" as O'Leary put it.

But while O'Leary didn't give his usual Net advocacy speech, the Web site's success is evident. Total operating expenses for the airline jumped 32 per cent as it hit a crucial expansion point (it opened seven new routes from London and six from Brussels), but it makes the point that a 44 per cent saving in marketing and distribution thanks to direct booking over the Internet helped offset this increase.

Plus, the fact that stepping from increase in customers to revenue increase to profit increase saw only a few percentage points drop each time is a remarkable argument in favour of low-cost, high-efficiency Web sites.

An interesting aside in the company's formal results announcement was the lambasting it gave the Irish government and Dublin airport. One paragraph reads: "Increased costs at Dublin Airport have resulted in higher fares and a reduction in traffic volumes from the UK (our biggest market) on a year-on-year basis. It is no coincidence that this failed policy has resulted in one of the worst ever years for Irish tourism. So long as monopoly protectionism, higher costs and Ministerial incompetence continues to adversely impact Irish tourism, Ryanair will continue to expand rapidly in Europe by opening new routes, guaranteeing lowest air fares and creating up to 500 new jobs outside of Ireland." Blimey, O'Reilly. ®

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