WHILE most of us fret over the prospect of a recession, the head of Europe's biggest budget airline appears to be relishing an economic slowdown.
Warning that his airline's profits could fall by 50 per cent in the coming year, Ryanair chief executive Michael O'Leary yesterday claimed a recession in the UK would be "great for the aviation industry".
He argued that an economic slump would "ge
t rid of environmental taxes and a lot of the environmental nonsense that's talked about regarding aviation."
O'Leary, who is well known for his colourful language and publicity stunts including dressing up as a Catholic priest, said: "We would welcome a good, deep recession for 12-18 months.
"During recessions travel does not get cut back but people look for cheaper alternatives. If we get a recession I don't see people cutting back on the amount of flying they do."
His comments came as Dublin-based Ryanair posted a bigger-than-expected fall in third-quarter profits, sending its shares tumbling. Net profit in the three months to the end of December slumped 27 per cent to 35 million (£26.3m) as winter fares fell almost 5 per cent. It was the first quarterly decline in Ryanair's profits for more than a year.
A warning that high oil prices, a tough economic backdrop and weak sterling could halve profits in the coming year hit other airline shares.
Analysts said carriers already making a loss and those heavily exposed to the UK market had the most to fear from the challenge posed by Ryanair.
NCB analyst Neil Glynn said: "We view the deteriorating outlook as UK-led and consequently see ramifications for our EasyJet and British Airways forecasts."
Gert Zonneveld of stockbroker Panmure Gordon added: "Ryanair has a strong track record and a proven business model with arguably the lowest cost base and highest profit margins in Europe.
"It has gone through difficult trading periods before, and the current one certainly will not be the last."
Although Ryanair stuck by its forecast for profit after tax to rise 17.5 per cent to 470m in the year to the end of March, O'Leary warned that earnings for the 2008-9 financial year could fall to 235m if economic conditions deteriorated and oil prices remained above $85 a barrel. On the group's most optimistic scenario, profit could grow 6 per cent to 500m if average ticket prices, or yields, are flat and oil prices drop to $75.
Last week, British Airways said soaring fuel costs remained its "biggest challenge".
The full article contains 434 words and appears in The Scotsman newspaper.
