Ryanair forecasts huge leap in profits
Ryanair announced today that it expects its full year net profit to be 25% more than originally forecast due to stronger than expected peak summer traffic and higher fares.
It also credited its ‘Always Getting Better’ customer service improvement programme for the rise from an anticipated €940 million to €970 million to a new range of €1.175 billion to €1.225 billion.
The airline had originally planned to update shareholders on its current trading at its September 24 AGM, but it said the strength of its July and August numbers had continued into September and the 40% year on year growth required its update to be brought forward.
It said traffic in the first half of the year was up 13%, fares were up 2% and traffic growth in the third quarter is expected to be 15%, while fares will be flat.
Ryanair has also benefited from lower than expected prices for the 10% of its fuel requirement for 2016 which is unhedged.
Ryanair cautioned that its full year profits remain heavily dependent on bookings in the third quarter, which is 30% sold, and the fourth quarter.
The airline continues to expect downward pressure on fares and yields this winter as it grows in major EU markets such as Germany, at a time when competitors will begin to benefit from lower oil prices as historic hedges run out.
Ryanair also confirmed that it has recovered all of the funds (less than $5m) that were the subject of a fraudulent electronic transfer to a Chinese bank in April.
Chief executive Michael O’Leary said: "We have been surprised by the strength of close-in bookings and fares this summer during which we delivered record 95% load factors in both July and August while fares grew by over 2%, when we had expected them to be flat.
"We would caution that not all of this improvement is due to either our model or our management.
"As a ‘load factor active/yield passive’ airline we have clearly benefited from favourable industry trends this summer including bad weather in Northern Europe, stronger sterling encouraging more UK families to holiday in the Med, reasonably flat capacity across the EU industry and lower prices for our unhedged oil.
"Being the airline industry we do not expect these favourable conditions will persist, and we would urge shareholders and analysts to avoid irrational exuberance while we continue to execute our very ambitious growth plans during what we expect to be very attritional and sustained fare wars across Europe this winter".
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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