MADRID (Reuters) – Low cost airline Ryanair has factored a European recession lasting up to 18 months into its business plan, its Chief Executive Michael O’Leary said on Tuesday.
O’Leary added he would welcome an economic slowdown across the continent that would make consumers more cost conscious and therefore choose Ryanair.
O’Leary said his sums for the next 12 months were based on the idea that the U.S. and then Europe would go into recession.
“We think the likelihood of a recession in Europe this year is strong,” O’Leary said, adding that he expected it to last 12 to 18 months.
“If we don’t get one, our results will be better than the numbers we are currently guiding,” he told reporters in Madrid after unveiling the Irish airline’s fifth Spanish hub in Reus, near Barcelona.
Under Ryanair’s worst-case scenario, oil would remain at around $95 a barrel while fares fell 5 percent. That could cut estimated net profits of €470 mil (£350 mil) for the current financial year to end-March to around €235 mil next year, O’Leary said, reiterating a recent warning. Oil cost $93 a barrel on Tuesday.
MORE SPANISH HUBS
Reus is Ryanair’s 26th hub and its fifth in Spain.
Promoting the launch wearing a dress, a wig and wings, O’Leary said Europe’s largest budget carrier would fly 1 million passengers between Reus and Ireland, Britain, Germany, France and other Spanish cities next year.
He said Ryanair was in talks with five or six other Spanish airports about making one of them the airline’s next hub in Spain, “probably for summer 2009″.
However after rapid expansion in Reus and other bases in Girona, Madrid, Valencia and Alicante O’Leary said Spain was not his priority in the search for new bases.
O’Leary added he doubted Ryanair would start routing Madrid flights to a new airport being built near Cuidad Real, on the plains of Castilla La Mancha, two hours south of the capital.
“It’s not very close to Madrid. We are talking to them but more as a destination in its own right. I think all the growth to Madrid will be to Madrid Barajas,” he said, referring to the home base of Spanish flag carrier Iberia.
(Additional reporting by Andras Gergely in Dublin; Editing by Paul Bolding)
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