Ryanair Reveals Thoughts on Growth Strategy

It now seems that Ryanair could be having second thoughts about how it wants to handle its growth. The company has just recently revealed that it is considering easing back on its decade long expansion as it struggles to keep a close watch on its operating costs. It seems that this new growth strategy could be to help keep low fares.

Recently, Ryanair reported a 35 percent jump in net profits to 250.0 million euros, which is about the same as $370 million, for the three months to September 30^th. This is thanks to a 42 percent drop in oil prices from a year earlier. The reduced fuel bill has helped mask a very steep 17 percent decline in average fares for the period. Overall it means that revenue has actually dropped by almost 4 percent.

The carrier went on to warn its investors that it plans to cut average fares by 20 percent in the next six months. This would mean that the airline would be looking at a loss for the second half of this year. However, the carrier does still predict that it will have profits come the end of the year, unlike many other airlines.

Ryanair also noted that if it is not able to sign a deal with Boeing for 200 planes by the end of the year, then it will return surplus cash to the shareholders as dividends. Michael O’Leary for Ryanair said that talks with Boeing on ordering the aircrafts for a 2013-16 delivery have not progressed much. He went on to add that it could be ending its traditional relationship with the United States aircraft maker.