Europe’s largest airline Ryanair reported a 29% slump in annual profits to €1.02bn despite a growth in traffic of 7% to 139 million.
The budget carrier said the rise in number of passengers flown was offset by a decline in fares of 6% to average of €37 in a fiercely competitive market.
The airline saw a strong performance in ancillary sales which were up 19% to €2.4bn for the year to March 31, but this was offset by rising costs, the carrier said.
Ryanair chief executive Michael O’Leary said: “As previously guided, Ryanair (excluding Lauda) reports a full year after tax profit of €1.02bn.
“Short-haul capacity growth and the absence of Easter in Q4 led to a 6% fare decline, which stimulated 7% traffic growth to over 139m (142m guests including Lauda).
“Ancillary sales performed strongly up 19% to €2.4bn, which drove total revenue growth of 6% to €7.6bn.”
Ryanair completed the purchase of Austrian airline Lauda in December recording an exceptional year-one loss of €139 million.
Overall load factors for the full year were marginally up by one percentage point to 96%.
Although costs were up around 5%, Ryanair said it has the lowest unit costs of any EU airline, and the gap between its EU competitors “continues to widen”.
The carrier said:  was a year of investment in our people, our support systems and our business as we grow to 200 million guests per annum by 2024.
“Ex-fuel unit costs rose 5% (better than previously guided 6%) due to €200m higher staff costs (including 20% pilot pay increases) and €50m higher EU261 costs due to the repeated ATC (Air Traffic Control) staff shortage disruptions.
“As weaker European airlines are sold or fail, airports are competing to attract Ryanair’s efficient, high load factor, traffic growth.
“Our airport costs are 35% lower than our nearest competitor. During 2019 our oil bill increased by €440m. We are 90% hedged for 2020 at $709 per tonne and 35% hedged for Q1 2021 at $654.”
Ryanair said its outlook for 2020 “remains cautious on pricing” but it forecast that traffic will grow by 8% to 153 million.
The carrier said it was expecting to see profits “broadly flat” assuming revenue per passenger growth (RRP) of 3%. This will range from €750m if RPP rises 2%, up to €950m if RPP rises 4%.
Ryanair added: “While first half bookings are slightly ahead of last year, fares are lower and we expect this trend will continue through 2019.
“We have zero second-half visibility. Costs will increase as our full-year fuel bill jumps by another €460m.
“Ex-fuel unit costs will rise by just 2%, mainly due to stronger sterling, the absence of Lauda prior-year cost comparisons for most of first half and delivery delays of the B737 MAX aircraft this year.
“This guidance is heavily dependent on close-in peak summer fares, second-half prices, the absence of security events, and no negative Brexit developments.”