Three decades after it launched the industry’s cheap flights
revolution, the Irish airline hopes to raise passenger numbers
by more than 8 percent annually in 2015-18, double last year’s
growth and up from a forecast of 5 percent it gave in March.

“What we have indicated to the market is pretty
conservative, it is at the lowest level we would expect,” deputy
CEO and Chief Operating Officer Michael Cawley said in an
interview. “It’s very likely to be much higher, edging up to 7
or 8 or even more.”

The bullish tone is firmly at odds with the economic
troubles afflicting business and governments across Europe.

Cawley said the debt problems faced by many of the
continent’s less developed and tourism-heavy southern countries
would play into Ryanair’s hands, forcing the privatisation of
airports and liberalisation of labour markets to provide the
cheaper regimes it demands before investing in a route.

The airline is “quite optimistic” it can clinch a deal to
boost passengers to Greece to 10 million passengers per year
from 1.5 million at present and said the government was actively
trying to unwind historic agreements with airports.

“You can look at the countries on the periphery and say they
are basket cases, but in fact the inverse of that is the case.
They are under-served,” Cawley said.

He said, for example, that the number of seats per head of
population was around five times higher in Dublin, Ryanair’s
home base, than in Athens, pointing to the room for expansion.

Cawley said he saw huge potential in secondary airports in
other parts of the Balkans and described Israel as a “fantastic
opportunity”, principally as a tourist destination.

ON A BUDGET

Ryanair’s no-frills model has attracted more international
scheduled passengers than any other airline, and it hopes to
boost its share of the European short-haul market from around 12
percent now to 20 percent within a decade.

Agreeing to buy 175 Boeing planes in March, the airline said
it would grow its fleet to 400 by 2018, flying 100 million
passengers per year, substantially at the expense of Europe’s
national legacy carriers.

But Cawley said numbers would only be that low if a “very
significant” number of planes were sold or returned to leasing
companies and that a number of 420-430 planes was more likely.

Ryanair has a history of guiding the market down before
beating expectations. It is due to release its full-year results
next Monday, with analysts forecasting pre-tax profit of 633
million euros, according to a Reuters poll.

Rapid expansion will come at a cost, however, with
discounted tickets on new routes cancelling out price increases
elsewhere, cutting average fare growth sharply from the 16
percent seen last year.

“Fares (on new routes) will reduce, undoubtedly, that is how
we expand,” Cawley said. “That’s the only way to stimulate more
people to travel. particularly in the economic environment we
are in today.”

“But (overall) we should see fares stable at least.”

Non-ticket income from extras such as baggage and in-flight
refreshments, which accounted for 21 percent of revenues last
year, will show “considerable growth” in 2013, boosted by the
surprisingly successful roll out of reserved seating on planes.

It is more difficult to predict how they will perform over
the next few years, but they will likely grow “a little bit
ahead of passenger traffic,” Cawley said.

(Editing by Patrick Graham)

The European Union, International Monetary Fund and European
Central Bank said Ireland was on course to become the first euro
zone country to complete its bailout at the end of the year, but
listed several concerns.

The ‘troika’ of lenders told the government to make sure
banks were tackling mortgage arrears after a “disappointingly
slow start”. They were also worried about unsustainable debts
owed by small and medium business.

“The authorities have made significant progress on financial
sector repair and restoring sustainability to the public
finances, yet remaining challenges require continuing policy
efforts,” the statement said.

Rescued by Europe and the IMF in late 2010, Ireland has
consistently hit the targets set under its bailout and raised 5
billion euros ($6.4 billion) in March through a 10-year bond.

The troika said Ireland needs “further policy efforts” to
bring down unemployment from 14 percent, and called for the
government to open up “competition in sheltered sectors such as
legal services”.

Strict implementation of measures announced in Ireland’s
budget are “essential,” the troika said.

The statement did not mention “stress tests” of Ireland’s
bailed-out banks. Sources said there was a standoff on the issue
between Irish and troika officials.

Dublin had wanted the tests to be held in conjunction with a
European-wide exercise, expected in early 2014, but agreed to
IMF and EU demands that they take place earlier.

If the international community continues to dither the crisis could turn into a humanitarian catastrophe that could scar the region for a generation, one of the leaders said.

Two years into Syria’s uprising-turned-civil war, which has killed at least 70,000 people, the international community is mired in a diplomatic stalemate with Russia and China opposing sanctions against the government of President Bashar al-Assad.

In Europe, Germany is resisting a Franco-British proposal to lift an arms embargo on Syria to support the outgunned rebels.

The heads of the United Nations World Food Programme, the World Health Organization and the UNICEF children’s fund joined aid chief Valerie Amos and High Commissioner for Refugees Antonio Guterres to say they were “precariously close” to suspending some humanitarian support.

“We, leaders of U.N. agencies charged with dealing with the human costs of this tragedy, appeal to political leaders involved to meet their responsibility to the people of Syria and to the future of the region,” said the statement, which is to be published in a number of newspapers on Tuesday.

“We ask that they use their collective influence to insist on a political solution to this horrendous crisis before hundreds of thousands more people lose their homes and lives and futures — in a region already at the tipping point,” it said.

The agencies are responsible for helping nearly 1.3 million Syrian refugees and almost 4 million more people displaced inside Syria by the conflict.

“CRISIS BECOMING CATASTROPHE”

The appeal comes ahead of a briefing by Guterres and Amos before the U.N. Security Council meeting on Thursday on the humanitarian situation in Syria.

One of the signatories of the appeal, UNICEF executive director Anthony Lake, said that “dithering” by the international community could have catastrophic consequences.

“The international community needs to find a political solution to this conflict before the human carnage grows and grows from a crisis to what is already becoming a catastrophe,” Lake said on the sidelines of a conference in Dublin.

“There is not enough funding, not enough attention, not enough political will,” Lake, a former U.S. National Security Advisor, told Reuters in an interview.

While the lack of progress in brokering a solution to the civil war is the biggest issue facing the humanitarian effort, a funding crunch is also having a growing impact, Lake said.

“The needs are outpacing the funding,” he said, adding that his agency, which has 60 full-time workers in Syria, might struggle to maintain its services in the coming months.

The United Nations said last week that it would halt food aid to 400,000 Syrian refugees in Lebanon next month unless it receives urgent new funding.

It said only $400 million out of more than $1.5 billion pledged by international donors in January to cover Syrian refugee needs for the first half of the year had been committed.

Unlike other crises, the high media profile of the Syria conflict has not translated into high donations, in part because the media are focusing closely on the politics rather than the human suffering, Lake said.

There is also a sense of crisis fatigue, he added.

“We have seen this in conflicts and crises before. After a while people see the same headline and they become inured.”

(Reporting by Conor Humphries; editing by Mike Collett-White)

Dublin and Lisbon lost access to affordable financing in
2010 and 2011 respectively and took emergency loans from Europe,
and extensions to these should make them less of a burden as the
countries seek to put their bailouts behind them.

“The intention is very positive to look at the extension of
the maturities both for Ireland and for Portugal,” Jeroen
Dijsselbloem, chairman of the euro zone finance ministers, told
a news conference.

Confirming what Reuters reported on Tuesday, Dijsselbloem
said the European Central Bank, the European Commission and the
International Monetary Fund made a proposal for a seven-year
extension, which is now under discussion.

“I hope that we will be able to finalise that tomorrow,” he
said, referring to the meeting of euro zone finance ministers on
Friday in Dublin.

The average maturity of the overall loans to Ireland is 12.5
years and to Portugal between 12.5 and 14.7 years depending on
which EU fund provided the money. Ireland is to return to full
market financing late this year and Portugal in 2014.

Dijsselbloem, who was speaking at University College Cork,
where he spent time as a student, said he also saw the euro
zone’s economy showing signs of growth towards the end of this
year and pulling out of recession, while he singled out Spain as
a country that could show a strong rebound.

“A meaningful recovery is not yet to be expected across the
euro zone until the end of this year and there will remain
significant differences between different member states,” he
said.

“Spain has the potential to become one of the economic
engines of the euro zone… I would not be surprised if Spain is
going to surprise us all by showing a very strong economic
recovery”.

But the government must not bow to political pressure to use this leeway to roll back its austerity drive or it will risk the national debt spiralling out of control, the Fiscal Advisory Council said in a report.

The council, set up under the country’s 2010 bailout from the European Union and International Monetary Fund, said it expects Ireland’s budget deficit to fall to 2 percent of economic output by 2015, easily undercutting the EU target of 3 percent.

A deal in February to switch a costly 30 billion euro promissory note used to pay for the rescue of failed Anglo Irish Bank into less expensive sovereign bonds, will save the government around 1 billion euros over the next two years, the council said.

This combined with a smaller than expected deficit in 2012 and an increase in the forecast for nominal GDP growth, means the government could scale back plans for 5.1 billion euros of fiscal adjustments over the next two years and still meet the 3 percent target.

As a result, the council said it was withdrawing an earlier call for an additional 1.9 billion euros in austerity measures as that had been aimed at creating a buffer against shocks.

“Because of recent developments a margin of safety has largely been achieved,” the council’s chairman John McHale told a news conference.

“Now it is critical that they don’t reduce what they are planning do currently so that margin of safety dissipates.”

An Irish minister said the government was exploring whether it could scale back its plans for 5.1 billion euros of adjustment by 2015.

European Union officials have called on Ireland not to ease back on austerity measures, but Europe Minister Lucinda Creighton told journalists it was a “domestic budgetary question” provided the government met its 3 percent deficit target.

“The deficit target is the absolute bottom line for us,” she said.

Creighton said the government was “very optimistic” that both Ireland and Portugal would get an extension on loan repayments to the European Union following discussions between euro zone finance ministers in Dublin this weekend.

The main benefit of a deal would be easing Ireland’s debt profile, but the deal will “hopefully (provide) a little bit more leeway for us in terms of flexibility” for future budgets, she said.

The fiscal council said was a one-in-three chance that Ireland would miss its 3 percent deficit target and that this risk would increase if the government scaled back planned austerity measures.

The main risks at present are over-spending in the health department, weakness in export markets and the risk of renewed uncertainty about the sustainability of debt in other euro zone economies.

Debut sustainability remains “very fragile”, McHale said.

(Reporting by Conor Humphries; Editing by Catherine Evans, John Stonestreet)

Elderfield was hired in 2010 to overhaul a watchdog that had
failed to rein in years of reckless lending that pushed the
Irish economy and banking sector to the brink.

A British citizen, he was the first non-Irish person to take
the role and his appointment signalled a shake-up for the
country’s close-knit banking community.

“He was a very good official, a very good regulator. I’m
sorry to lose him,” Finance Minister Michael Noonan told
Reuters. Elderfield will step down in six months.

The appointment of his successor will be closely watched for
signs of whether the central bank intends to become more
aggressive in its push for banks to deal with soured mortgage
debt following the sector’s relative stabilisation.

The key will be whether it plumps for another outsider, said
Lorcan Roche Kelly, the Irish-based chief European strategist at
research firm TrendMacro. “You need someone who is willing to
push the banks quite hard,” he said.

Elderfield’s resignation comes weeks after he announced
binding deadlines for Bank of Ireland, Allied Irish
Banks and permanent tsb to address troubled mortgages,
saying the central bank would force them to write down the value
of housing loans if measures proposed were deemed unsustainable.

Elderfield declined to comment on his plans. He had
previously made clear that he only intended to spend a few years
in Ireland.

Some of Elderfield’s functions may be transferred
immediately depending on what his future employment plans are,
Noonan said.

Elderfield, whose salary of 340,000 euros is higher than
that of his boss, central bank governor Patrick Honohan, has
waived a 100,000 euro bonus, which he was entitled to at the end
of his contract. Honohan earned 213,000 euros in 2012.

WILD WEST OF FINANCE

When Elderfield arrived, Ireland had earned the moniker “The
Wild West of European Finance” for the scale of its banking
problems, which eventually triggered a sovereign bailout. One
member of parliament said the country didn’t need foreigners
telling it what to do.

Among alleged violations under the previous regulator,
investigators are probing whether executives at Anglo Irish
Bank, since closed, unlawfully gave loans to a group of high
profile investors to buy shares in the bank and whether deposits
from another lender were used to mask large withdrawals.

“Before the crash financial services operated in a fog of
opacity, an environment in which they did whatever they wanted.
His arrival has dramatically changed that landscape,” said
Constantin Gurdgiev, a lecturer in finance at Trinity College,
Dublin.

“The challenge now with his departure is can we stay the
course? We have to be prepared to take more aggressive steps.”

During his time as regulator, Elderfield introduced stiffer
fines and boosted staffing at the regulator, which he said was
surprisingly poorly resourced when he arrived.

He has called for a re-evaluation of financial crime laws,
saying delays in prosecuting those involved in the collapse of
the banks were undermining public confidence.

Elderfield oversaw the shuttering of Anglo and fellow lender
Irish Nationwide under an EU-IMF bailout and helped to manage
the shrinking of other lenders to reduce their dependence on
emergency funding from the European Central Bank

Before taking the job in Ireland, he was the head of
financial regulation in Bermuda and spent eight years at the UK
Financial Services Authority.

He is also the alternate chairperson of the European Banking
Authority, the European Union regulatory body, based in London.

Moody’s, the only agency that ranks Ireland’s debt as
‘junk’, said on Thursday that, despite the country’s steady
progress in regaining market access, it was maintaining its Ba1
rating with a negative outlook.

“Ireland’s vulnerability to wider euro-area stresses has
been reaffirmed by euro area policymakers’ handling of the
Cyprus crisis,” Moody’s said in a statement.

The crisis showed policymakers’ “increased risk tolerance”
and “a more uncompromising and less predictable approach to
crisis management”, it added.

Irish officials had hoped Moody’s would at least lift its
negative outlook after taking its biggest step yet this month
towards exiting an EU/IMF bailout this year, selling 5 billion
euros ($6.4 billion) of new 10-year bonds.

The head of Ireland’s debt agency John Corrigan said at the
time that the success of the auction indicated “either the
market is wrong or Moody’s is wrong.”

Moody’s Ireland analyst Kristin Lindow said there was no
contradiction as market pricing was about “a lot more than just
credit risk.”

She said she could not say whether or not there would be an
upgrade in the current year, in part because it was unclear how
the broader euro zone crisis would develop.

“If there were mistakes made that lead to turbulence in the
markets, Ireland specific events might not be able to counter
that,” Lindow told Reuters in a telephone interview.

Bond dealers said the rating affirmation was a big
disappointment as many investors had priced in an upgrade but
market reaction was relatively muted with the yield on Ireland’s
benchmark 2023 bond widening by 2 basis points to
4.28 percent at 1224 GMT.

GROWTH FUNDAMENTAL

Weakness in euro zone economies could impact Ireland’s
economic growth, the “fundamental issue” that will determine
future ratings, Lindow said.

While resilient exports have seen Ireland’s economy grow for
the last two years and data last week showed consumer spending
had risen in the last two quarters of 2012, figures on Thursday
painted a picture of a domestic economy remaining sluggish.

On the domestic front, Moody’s said the biggest risk was the
continued poor asset quality of Irish banks, and their likely
reluctance to provide new credit when loan demand revives,
indicated that the country did not deserve investment grade.

On the other hand, a precautionary credit line from the
International Monetary Fund and European Union would be “viewed
positively” as it would qualify Ireland for its new bond buying
programme, the Outright Monetary Transactions scheme.

Analysts said Moody’s decision not to change its outlook
could dampen enthusiasm about Ireland after 18 months in which
bond yields have fallen from around 15 percent ago to just over
4 percent.

“Following the almost uninterrupted run of more favourable
news flow on the Irish economy and sovereign over recent months,
Moody’s provides what might be described as a reality check this
morning,” said Dermot O’Leary, chief economist at Goodbody
Stockbrokers.

“Ultimately, the decision is a reminder that the job is not
done.” ($1 = 0.7824 euros)

Paris and London want to exempt Assad’s opponents from an EU arms embargo, a step they believe would raise pressure on Assad to negotiate after two years of a civil war that has claimed 70,000 lives.

But they won little support from other EU member states at a foreign ministers’ meeting in Dublin, diplomats said, despite raising concerns about chemical weapons to bolster their case.

“I insisted that very close attention must be paid to the possible use by Assad of chemical weapons … There are indications that he might have used them or that he might use them,” French Foreign Minister Laurent Fabius told reporters at the close of Friday’s talks.

Assad’s supporters and opponents accused each other of using chemical weapons after 26 people were killed in a rocket attack near the northern city of Aleppo this week.

In a letter to EU foreign policy chief Catherine Ashton setting out their case, Fabius and British Foreign Secretary William Hague said they were “increasingly concerned about the regime’s willingness to use chemical weapons”.

Countries such as Germany and Austria remain opposed to lifting the arms embargo for the rebels. They fear it could lead to weapons falling into the hands of Islamist militants, fuel regional conflict and encourage Assad’s backers, Iran and Russia, to step up arms supplies to him.

“We are reluctant about lifting the embargo … We have to avoid that weapons could come into the wrong hands and that terrorists, jihadists, extremists would misuse these weapons,” Germany’s Foreign Minister Guido Westerwelle told reporters.

COMPROMISE

The EU has until June 1 to decide whether to renew or amend its sanctions on Syria and discussions on what to do about the arms embargo will continue in EU working groups.

Changing the arms ban needs the backing of all 27 EU states. Without agreement, all EU measures against Syria, including asset freezes and travel bans, would collapse on June 1.

Hague and Fabius signaled their readiness to compromise by saying in their letter that they would accept “some very serious amendment” of the arms embargo, short of its complete lifting.

The embargo was previously amended in February to allow non-lethal assistance for the opposition.

Austrian Foreign Minister Michael Spindelegger said he could not see any reason for a compromise. “We are totally against so I can’t see where there could be a compromise,” he said.

If the arms embargo were to be lifted, Spindelegger said it would make it very difficult for Austria to leave several hundred troops on the Israeli-occupied Golan Heights as part of a U.N. peacekeeping force, because the EU would be perceived as taking sides in the Syria conflict.

Some opponents of lifting the arms embargo are ready to look at easing economic sanctions on rebel-held areas of Syria to try to strengthen the opposition.

One option would be to ease a ban on EU oil imports from Syria to permit opposition groups to sell oil to Europe, EU diplomats said.

“We must look at how we can increase assistance to the moderate Syrian opposition, in particular through political and economic support,” Ashton said in a statement.

Ministers would look at “all options” to help bring about a political solution in Syria, she said.

(Additional reporting by Justyna Pawlak in Brussels; Editing by Michael Roddy)

British Foreign Secretary William Hague said as he arrived for an EU foreign ministers’ meeting in Dublin that there was a “very strong case” for lifting or seriously amending the ban on sending weapons to the opposition when EU sanctions on Syria come up for renewal on June 1.

Rebels fighting forces loyal to Syrian President Bashar al-Assad have called on Western powers to do more to help them win a two-year-old civil war that has killed 70,000 people.

But Germany, Austria, Sweden and other states fear a proliferation of guns could fuel regional conflict and arm Islamist militants.

“We have to help and to support the (Syrian) people … but … we have to avoid a conflagration,” German Foreign Minister Guido Westerwelle told reporters in Dublin.

Before the meeting, Hague and his French counterpart Laurent Fabius wrote to EU foreign policy chief Catherine Ashton setting out their arguments, saying they were “increasingly concerned about the regime’s willingness to use chemical weapons”.

CHEMICAL WEAPONS

The Syrian government and rebels have accused each other of using a chemical weapon in clashes near the northern city of Aleppo on Tuesday that killed 26 people. However, a U.S. official has said it increasingly appeared a chemical weapon was not used.

All 27 EU states would have to agree to renew or change the arms embargo and other sanctions. If they cannot agree, all EU measures against Syria, including asset freezes and travel bans, would collapse on June 1.

Opponents of Britain and France’s drive to lift the ban calculate London and Paris will not push the issue to the point where it could lead all the sanctions to fall.

French officials have suggested Paris was using the threat of lifting sanctions primarily as a way of piling more pressure on Assad.

However, Hague and Fabius wrote in the letter: “It is increasingly difficult to argue the case for retaining the overall sanctions regime if those sanctions do not exempt the support that the opposition now need.”

Hague and Fabius also signalled their readiness to compromise by saying they would accept “some very serious amendment” of the arms embargo, short of its complete lifting.

The embargo was previously amended in February to allow non-lethal assistance for the opposition.

Austrian Foreign Minister Michael Spindelegger said he could not see any reason for a compromise. “We are totally against so I can’t see where there could be a compromise,” he said.

If the arms embargo were lifted, Spindelegger said it would make it very difficult for Austria to leave several hundred troops on the Israeli-occupied Golan Heights as part of a U.N. peacekeeping force, because the EU would be perceived as taking sides in the Syria conflict.

No decision is expected at the foreign ministers’ meeting which ends on Saturday. The issue is likely to be discussed further in EU working groups.

(Additional reporting by Justyna Pawlak in Brussels; Editing by Andrew Heavens)

The country, which last week took its biggest step yet towards exiting an EU/IMF bailout later this year by selling 5 billion euros ($6.5 billion) of 10-year debt, is one of few euro zone economies to have managed to eke out mild growth.

It grew for the second year in a row in 2012, data showed on Thursday, expanding 0.9 percent as forecast by the government and beating analysts’ projections for 0.6 percent growth.

The economy was flat in the fourth quarter, but beat expectations and narrowly avoided falling back into recession thanks to consumer spending, which rose for a second quarter.

That is an encouraging sign for this year with the government targeting getting growth back to the 1.5 percent level seen in 2011. However, with yet more harsh spending cuts and tax hikes on the way to cut one of the highest budget deficits in Europe, Ireland will not be able to rely on a domestic recovery, leaving it still vulnerable to shaky global demand.

“The pressure on domestic demand is easing at a time when the global outlook is uncertain and that is reassuring,” said Austin Hughes, chief economist at KBC Bank Ireland, after data showed consumer spending rose in the fourth quarter by 1 percent from the previous quarter.

“While it certainly wouldn’t be right to say that the good times are back, it does give you more optimism that the current Irish growth model isn’t broken. The worst of the domestic demand adjustment seems to be behind us. I would be a little more encouraged for 2013.”

Flat fourth-quarter gross domestic product (GDP) confounded analysts’ expectations for a 0.3 percent dip that would have put the economy back in recession, defined as two consecutive quarters of falling quarterly GDP.

It also beat a 0.6 percent contraction recorded for the euro zone as a whole. Of euro zone countries that have reported data, only Estonia and Slovakia grew in the last quarter, with Germany marking its worst performance since the height of the global financial crisis in 2009 with a 0.6 percent dip.

“BIT WORRYING”

Irish GDP for the third quarter of last year was revised down to a decline of 0.4 percent from the previous quarter, compared with an initial estimate of a 0.2 percent contraction, as exports fell by more than initially thought.

Exports improved in the fourth quarter, but only grew by 0.5 percent and have now failed to keep pace with imports for three of the last four quarters.

The government sees economic growth accelerating to above 2.5 percent in 2014 and in 2015, a level needed to put government debt, set to peak at 121 percent of GDP this year, on a downward trajectory.

“It’s a bit worrying when you see growth contracting in Q3, flat in Q4 and a continued export slowdown but overall it’s positive,” said Conall Mac Coille, chief economist at Davy Stockbrokers.

“Growth is slowing year on year, but it doesn’t really change the government’s picture too much because targets are for 2015. I don’t think today’s numbers will impact that target too much.”

(Writing by Padraic Halpin; Editing by Susan Fenton)