Ryanair to hike fares by 5 per cent, ground 20 aircraft as fuel costs soar

Budget airline Ryanair, which warned yesterday that it would have to ground up to 20 aircraft this winter, today said its fares may have to rise 5 per cent this year as fuel costs increase.

But its boss O'Leary said Ryanair would never introduce fuel surcharges even if oil reached $500 a barrel and denied that the era of low-cost air travel in Europe was over.

He said the cuts would not mean route reduction but would merely mean a reduction in frequency to some destinations.

While some airlines would ''go bust'' if oil stays at $130 a barrel, he said Rainair will cut costs across the business in order to keep fares down.

O'Leary blamed an ''incompetent'' aviation regulator the Civil Aviation Authority (CAA) and an ''inefficiently designed, inefficiently built and abominable'' airport operator BAA for much of airlines' woes.

Unveiling Ryanair's 2007-08 results in London, O'Leary said its pre-tax profits rose 17 per cent to 528 million euro (around £419 million). Net profit in the year ending 31 March, however, fell to 391 million euros ($610 million) from 436 million euros a year earlier. Ryanair's bottom line was hurt by one-time charges, including a 91.6 million-euro write-down on its stake in Irish competitor Air Lingus Group, he said.

He said Ryanair would break even if oil prices remained at $130 but it would lose money if oil rose above that.

O'Leary said he and other top Ryanair managers were having their pay frozen this year.

He said that fuel surcharges introduced by carriers such as British Airways were ''completely unjustified'' and were ''just a scam'' to take more money from the travelling public.

Ryanair, O'Leary said, carried 50.9 million passengers during the year – 20 per cent more than last year. This figure was expected to rise a further 17 per cent to 59 million in the current financial year and could go as high as 82 million a year by 2012. The carrier has 163 aircraft and this number could rise to 262 by 2012, he added.