DUBLIN – Ryanair said Monday its first-half net profit rose 17 percent to euro451.9 million ($628 million) as the budget airline raised its ticket prices and grew its business in the Mediterranean.
The airline said its average fare rose 12 percent to euro44 ($61) from the same April-September period a year ago as increased operations in Spain, Portugal and Malta paid off. The fare figure excludes Ryanair's industry-leading practice of adding hefty extra charges for luggage and credit-card use.
Sales rose 23 percent to euro2.18 billion ($3 billion), the number of passengers rose 10 percent to 40.1 million, and Ryanair's cash reserves rose 7.5 percent to euro3.03 billion ($4.2 billion).
The airline cautioned that it expects to suffer net losses in the October-March period of euro50 million to euro70 million, reflecting reduced business on routes dependent on summer tourist traffic. Ryanair, which previously guided second-half losses of up to euro100 million, tries to offset winter losses by shifting aircraft seasonally to operations in Spain.
Chief executive Michael O'Leary said Ryanair's earnings would have been even better if not for European authorities.
About 9,400 Ryanair flights were canceled in April and May because of European restrictions amid volcanic ash fears. More than 2,000 other Ryanair flights have been canceled and 12,000 delayed this summer by air-traffic control strikes in France, Belgium and Spain.
O'Leary said the European Union must reform its laws permitting air-traffic controllers to strike. He said the controllers' unions and European governments should be required to pay compensation to stranded passengers, not airlines.
"These highly paid protected bureaucrats have now disrupted more passengers than the Icelandic volcano and still the EU sits idly by and does nothing," O'Leary said.
Ryanair also greatly reduced its total cost for spring's ash-related losses. The airline initially said it would lose euro50 million from lost business and EU-ordered compensation payments to stranded customers, but on Monday said its total loss might not exceed euro32 million. It attributed this to the airline's lower-than-expected payouts on customers' claims for hotel and meal bills.
O'Leary's deputy chief executive, Michael Cawley, told Irish broadcasters RTE that Ryanair still expects to take over its Irish rival, Aer Lingus — whenever the cash-strapped government drops its opposition to a merger.
"Our appetite for acquiring Aer Lingus is well known," Cawley said. "But we're not going to make another offer unless the government approaches us on a voluntary basis to offer their shares to us."
Ryanair immediately pounced on Aer Lingus when the government floated the national airline on the Irish and British stock markets in 2006. But other major shareholders, chiefly the government and employee-controlled trusts, refused Ryanair's offer, and European Union regulators in 2007 ruled that a merger would create an effective Irish monopoly in short-haul air travel.
Ryanair today retains a 30 percent stake in Aer Lingus, while the government holds 25 percent. Last week Britain's Office of Fair Trading announced an investigation into whether Ryanair's status as the top shareholder influences Aer Lingus policies. Cawley said Ryanair is "puzzled and baffled" by the British investigation.
Ryanair earnings, http://bit.ly/d3evab
Tax cuts enacted in 2001 and 2003 are to expire in January unless Congress renews them.
_Income tax rates were reduced, to a bottom rate of 10 percent and a top rate of 35 percent. If the cuts expire, the bottom rate would increase to 15 percent, the top rate would rise to 39.6 percent, and several rates in between would increase as well.
_The child tax credit was increased from $500 per child to $1,000 per child.
_Marriage penalty relief. The standard deduction for married couples was increased, easing the tax hit on many married couples.
_Capital gains taxes were cut, with the top rate dropping from 20 percent to 15 percent.
_Taxes on dividends were cut. Instead of taxing dividends at the same rate as earned income, with a top marginal rate of 39.6 percent, the top rate was set at 15 percent.
_The federal estate tax, which had a top rate of 55 percent, was gradually reduced, then repealed for 2010. It is scheduled to return to 55 percent next year, with a $1 million exemption.
_The Alternative Minimum Tax is adjusted each year to spare more than 30 million middle-income families from a tax increases averaging $3,700. The tax was enacted in 1969 to make sure wealthy people couldn't avoid taxes altogether, but it wasn't indexed for inflation.
Sources: Joint Committee on Taxation; Tax Policy Center.
BEIJING (Reuters) – China's factories ramped up their production last month and were buoyed by an influx of new business, highlighting the strength of the world's second-largest economy but also pointing to price pressures.
Two surveys of the manufacturing sector, which are designed to provide an early indication of conditions in a broad range of industries, both jumped to six-month highs in October.
The official purchasing managers' index (PMI) rose to 54.7 in the month from 53.8 in September, blowing past expectations. The HSBC PMI, a private companion, climbed to 54.8 from 52.9.
The increase was all the more impressive since the official survey has traditionally sagged in October, weighed down by the week-long National Day holiday, when factory production slows.
"The fact that the PMI went up despite this seasonal bias suggests real activity growth was likely to have been exceedingly strong in October," Goldman Sachs economists Yu Song and Helen Qiao said in a note to clients.
Asian shares were lifted by the surprisingly strong PMIs, with the main index in Shanghai rising 1.9 percent in the morning session.
Four straight months of stronger official PMIs jive with other signs that China's economy has built up a head of steam.
This momentum gave the government the confidence to raise interest rates on October 19 for the first time in nearly three years, and some economists believe another increase could be in store before the end of the year.
Both surveys showed that output expansion was driven by domestic growth, not external demand.
While the sub-index for total new orders in the official PMI climbed to a six-month high of 58.2 from 56.3, that for new export orders dipped to 52.6 from 52.8. The HSBC survey revealed a similar pattern.
"Another upbeat reading for the HSBC China Manufacturing PMI suggests strong growth momentum in domestic demand to warrant about 9 percent GDP growth in the fourth quarter, despite the still soft increase in new export orders," said Qu Hongbin, chief economist for China at HSBC.
The 54.7 reading for the official PMI, released by the China Federation of Logistics and Purchasing (CFLP), was higher than the median forecast of 52.9 in a Reuters poll of 12 economists and, in fact, higher than every individual forecast.
But Zhang Liqun, a government researcher, cautioned against over-optimism, saying that growth was likely to ease and that inflationary pressures were a concern.
"The continued pick-up in the October PMI shows that the trend of economic stabilization is becoming clearer. However, we need to note that economic expansion might slow in the future as investment and export growth both slowed in the third quarter," he said in a comment on behalf of the logistics federation, which compiles the index for the National Bureau of Statistics.
"Input prices climbed fast, meaning rising cost pressure for companies. We need to pay close attention to the economic trend and must not be over-optimistic," he added.
Input prices rose to a six-month high of 69.9 from 65.3 in September.
China reports inflation data for October next week. Many economists expect that consumer prices will have risen to a nearly two-year high, though that could be at their cyclical peak.
In the HSBC survey, both input and output prices increased at their fastest pace in 27 months. Manufacturing executives pointed to higher raw material costs -- especially, coal, cotton, grain and steel -- and said that they had increased output prices to protect their operating margins.
Chinese growth has been decelerating, at least in year-on-year terms, throughout the year.
After growing 11.9 percent from a year earlier in the first quarter, the pace slowed to 10.3 percent in the second quarter and 9.6 percent in the third quarter.
The data marked the 20th straight month that the official PMI stood above the threshold of 50 that demarcates expansion from contraction.
The index hit a record low of 38.8 in November 2008 and was last below 50 in February 2009.
(Editing by Ken Wills and Neil Fullick)