Interesting comments from Michael o'leary - who is correctly expecting many airlines to go bankrupt this winter. As in any industry - the lowest cost competitor always thrives (Think walmart). Seems he is relishing losing a lot of competition before next summer.
Michael O'Leary, chief executive of Ryanair, forecast on Tuesday that the next winter season would be "awful" in the European airline sector amid continuing fare wars and a shake-out among the many recent start-up low-cost airlines.
"We will be helping to make it awful," he said, "some will not survive". "There will be casualties this winter."
Mr O'Leary, who shocked investors two months ago by issuing Ryanair's first profit warning since flotation in 1997, said he was unable to give any profit guidance for the current financial year to the end of March 2005 because the outlook remained so uncertain.
The most difficult markets were Germany, where many new carriers have entered the arena and EasyJet is expanding rapidly, and the UK regions.
Mr O'Leary said many new entrant airlines were losing money on a "heroic scale".
"Most will not survive more than 18 to 24 months," added Mr O'Leary who said Ryanair would not be leading any consolidation efforts.
Ryanair yields or average fare levels could fall by between 5 and 20 per cent this year following a fall of 15 per cent in the latest 12 months to the end of March, he said.
With a 20 per cent decline in yields Ryanair, for long the most profitable airline in Europe, would only break even, warned Mr O'Leary. With a 5 per cent decline in yields, the trend that is built into the group's long term business model, Ryanair net profits would rise this year by 15 to 20 per cent.
The group is due to report its full-year results on June 1. These would be in line with current guidance, said Mr O'Leary, for a fall in net profits by 10 per cent, the first decline in 15 years, to around €215m from €239.4m a year ago.
Until February Ryanair had been forecasting a rise of 10 per cent in net profits to March 2004, but it was caught out by the scale of the fall in yields in its final three months of 25 to 30 per cent, as it was forced to discount heavily to fill all the empty seats resulting from an overambitious expansion of capacity.
The group could report its first quarterly loss since flotation for the fourth quarter, and on Tuesday it announced that it was giving away another 800,000 flights up to the end of June with passengers paying only charges and taxes.
Rival airlines such as EasyJet have been better able to protect fare levels by slowing the rate of capacity expansion, and Ryanair too is aiming to slow its growth from next month.
The airline has been punished by investors for its fall from grace and has been the second worst performer in the FTSE Eurotop 300, the index covering Europe's 300 biggest listed companies, since the beginning of the year.
The Ryanair share price fell from a high of €7.59 in January to a low of €4.27 in March. It closed 2.4 per cent lower on Tuesday at €4.94.
Mr O'Leary said that Ryanair was two-thirds of the way through the process of restructuring its existing agreements with publicly-owned airports around Europe, so that the deals would comply with the guidelines expected to be issued by the European Commission against illegal state aid.
The Commission found Ryanair guilty earlier this year of receiving illegal state aid at Charleroi airport, Belgium, which is owned by the regional Walloon government.
Mr O'Leary said, however, that any ultimate repayment of aid was likely to total less than €1m, and the airline would in any case launch its appeal to the European Court of First Instance early next month against the Commission ruling.
Michael O'Leary, chief executive of Ryanair, forecast on Tuesday that the next winter season would be "awful" in the European airline sector amid continuing fare wars and a shake-out among the many recent start-up low-cost airlines.
"We will be helping to make it awful," he said, "some will not survive". "There will be casualties this winter."
Mr O'Leary, who shocked investors two months ago by issuing Ryanair's first profit warning since flotation in 1997, said he was unable to give any profit guidance for the current financial year to the end of March 2005 because the outlook remained so uncertain.
The most difficult markets were Germany, where many new carriers have entered the arena and EasyJet is expanding rapidly, and the UK regions.
Mr O'Leary said many new entrant airlines were losing money on a "heroic scale".
"Most will not survive more than 18 to 24 months," added Mr O'Leary who said Ryanair would not be leading any consolidation efforts.
Ryanair yields or average fare levels could fall by between 5 and 20 per cent this year following a fall of 15 per cent in the latest 12 months to the end of March, he said.
With a 20 per cent decline in yields Ryanair, for long the most profitable airline in Europe, would only break even, warned Mr O'Leary. With a 5 per cent decline in yields, the trend that is built into the group's long term business model, Ryanair net profits would rise this year by 15 to 20 per cent.
The group is due to report its full-year results on June 1. These would be in line with current guidance, said Mr O'Leary, for a fall in net profits by 10 per cent, the first decline in 15 years, to around €215m from €239.4m a year ago.
Until February Ryanair had been forecasting a rise of 10 per cent in net profits to March 2004, but it was caught out by the scale of the fall in yields in its final three months of 25 to 30 per cent, as it was forced to discount heavily to fill all the empty seats resulting from an overambitious expansion of capacity.
The group could report its first quarterly loss since flotation for the fourth quarter, and on Tuesday it announced that it was giving away another 800,000 flights up to the end of June with passengers paying only charges and taxes.
Rival airlines such as EasyJet have been better able to protect fare levels by slowing the rate of capacity expansion, and Ryanair too is aiming to slow its growth from next month.
The airline has been punished by investors for its fall from grace and has been the second worst performer in the FTSE Eurotop 300, the index covering Europe's 300 biggest listed companies, since the beginning of the year.
The Ryanair share price fell from a high of €7.59 in January to a low of €4.27 in March. It closed 2.4 per cent lower on Tuesday at €4.94.
Mr O'Leary said that Ryanair was two-thirds of the way through the process of restructuring its existing agreements with publicly-owned airports around Europe, so that the deals would comply with the guidelines expected to be issued by the European Commission against illegal state aid.
The Commission found Ryanair guilty earlier this year of receiving illegal state aid at Charleroi airport, Belgium, which is owned by the regional Walloon government.
Mr O'Leary said, however, that any ultimate repayment of aid was likely to total less than €1m, and the airline would in any case launch its appeal to the European Court of First Instance early next month against the Commission ruling.