Ryanair Profit Jumps, but Fuel Could Hurt

Persistently high oil prices may hurt Ryanair's profit but the airline, which reported a 20 percent rise in net full-year profit, will be among the few European carriers still flying in two or three years if crude remains at the current prices, CEO Michael O'Leary told CNBC Europe on Tuesday.

Ryanair's net profit excluding one-off items rose to 480.9 million euros ($748 million) in the 12 months to the end of March, compared with 401.4 million euros a year earlier and the 474.7 million average of 18 analysts' forecasts in Reuters Estimates.


If oil stays at $130 a barrel "our profits would fall … probably to break even," O'Leary said, referring to the year ending March 2009.

But the low-cost airline is in a better position than many European rivals to weather high fuel prices and an economic slowdown, he said.

"This is a cyclical industry… you make much more money out of the crisis than in the good times. In the good times in the airline industry any idiot can make money," O'Leary added.

Business Class Hardest Hit?

Business-class airlines as well as traditional commercial ones will be the ones hit the hardest, and many of them will disappear if oil prices stay high as consumers will adapt and start looking for the lowest price instead of the highest comfort, he said.

"BA, Air France, Lufthansa and Ryanair will be the only airlines left in Europe if oil prices continue (at this level) for 2-3 years," O'Leary said. "High oil prices are the end of high-fare air travel."

Airlines everywhere around the world have felt the squeeze, as merger deals such as that between UAL's United Airlines and US Airways were put on hold for fears integration costs will add to those for fuel.

The International Air Transport Association, which represents more than 240 airlines around the world, forecast that the industry will lose $2.3 billion this year because of hikes in oil prices, changing previous predictions of a collective profit of $4.5 billion.

But the situation is not likely to be as bleak as some have predicted, said O'Leary, who added that airlines will now focus on monopoly airport taxes and environmental charges to try to cut some costs.

"I would still be generally optimistic on fuel," he told "Squawk Box Europe." "I think oil prices will come down, but like anyone in the industry, I have no idea when."