Ryanair's profit margins will shrink by one-third next year if oil prices stay at their current record level

Ryanair's profit margins will shrink by one-third next year if oil prices stay at their current record level but it will remain one of the few airlines in Europe to be making money, Michael O'Leary, the chief executive of the no-frills carrier, forecast yesterday. Agreeing with a recent research report from Davy stockbrokers, Mr O'Leary said that at $50-a-barrel, Ryanair's margins would fall from 20 per cent this year to 14 per cent in 2005-06 but it would still be profitable even if the price of oil hit $60. The Ryanair chief repeated his prediction that there would be a "bloodbath" this winter among Europe's airlines and he attacked the decision by its low-cost rival, easyJet, to take on Ryanair in its backyard by launching three new routes from Gatwick to Ireland. Mr O'Leary labelled his opposite number at easyJet, Ray Webster, the "John Kerry of the European airline industry" for the way he had "flip-flopped" by first backing away from head-to-head competition with Ryanair and then deciding to compete directly with it on routes to Knock, Shannon and Cork.