Ryanair to 'break even in 2009'

Ryanair says it can absorb rising oil costs in the short term

Budget airline Ryanair says it expects to only break even next year if oil prices stay near $130 a barrel, as it revealed a 20% rise in annual profit.

Net profit before one-off items rose to 480.9m euros ($748m; �381m) in the 12 months to the end of March, compared with 401.4m euros a year before.

It said it could absorb high oil costs even if profits fell in the short term.

Rising oil prices and an economic slowdown have raised concerns about the profitability of airlines.

Our prices are set by our passengers. We manage our flights to make sure the flights are 80% full Michael O'Leary, Ryanair chief executive Check Ryanair's share price

But Ryanair said it was better placed than other European airlines to cope with any downturn.

"Based on forward bookings, we now believe it likely that average fares for the coming year will rise by approximately 5% and if oil prices remain at $130 per barrel, then we expect to accordingly break even for fiscal 2009," chief executive Michael O'Leary said in a statement.

He told the BBC that it appeared the airline was going to be able to absorb the current fuel increases, and he accused BA of driving airline fares up in Europe through its fuel surcharges.

He said: "Our prices are set by our passengers. We manage our flights to make sure the flights are 80% full."

Last month Ryanair said it was to increase its check-in charges by �1 to �4 per passenger and by �2 to �8 per bag to try to reduce its airport costs.

Mr O'Leary said: "We are trying to persuade passengers to carry hand luggage, and to fly in a way that cuts our costs to a minimum.

"If you want additional services like checking in a bag, or using a credit card to pay, you have to pay for those services."

But he denied that these charges were fuel surcharges in disguise, and said whatever happened to the oil price, Ryanair would not make its customers pay fuel surcharges.

"It's a guarantee - oil at $150, $200 dollars a barrel, there will be no fuel surcharges on Ryanair.

"This morning's profits are up 20% because the average fares including the baggage charges fell by 1% last year. We're still lowering the cost of air travel which is why we're growing so rapidly."

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