Ryanair raises profit forecast

Ryanair plans more European bases
Ryanair plans more European bases

Ryanair’s customer and technology initiatives appear to be paying off after the low-cost carrier announced a soar in profits, although the period was also helped along by the Easter weekend.

The Irish airline announced a first quarter profit of EU197 million, up 152% on last year with passenger number up 4% to 24.3m.

This pushed load factors up 4% to 86% in a period when a late Easter boosted the numbers, alongside a new customer care scheme and new bases in Athens, Brussels, Lisbon and Rome.

Its customer experience improvements have included allocated seating, a free second carry-on bag, a family product and new app, with a business service to come in September as well as wider GDS distribution and continued changes to its website.

Looking ahead the carrier is planning bases in Cologne, Gdansk, Warsaw and Glasgow International this winter and will release its summer 2015 schedule three months earlier than usual in mid-September.

Ryanair CEO Michael O’Leary said: “We are overrun with growth offers from primary European airports whose incumbent flag and regional carriers continue to cut capacity and traffic. These new airports along with our existing 69 bases offer Ryanair significant growth opportunities as the first of our 180 new Boeing order delivers this September. These new aircraft, with the benefit of the much weaker US dollar, will drive significant cost efficiencies over the next five years.”

O’Leary said the airline is ‘clear’ to deliver a strong first half of the year with traffic up 3% against a 6% increase in fares, but warned of challenges. Full-year traffic is expected to grow 5% to 86 million, with its full year profit after tax expected to sit between EUR620m to EUR650m, up from the previously estimated GBP580m to EUR620m.

Based on these Q1 results and our strong forward bookings it is clear that we are on track to deliver a strong H1. However we would strongly caution both analysts and investors against any irrational exuberance in what continues to be a difficult economic environment, with some company-specific challenges in H2,” he said. “We expect H2 to be characterised by a much softer pricing environment as many competitors are lowering fares, partly in response to Ryanair’s strong forward bookings. Added to this Ryanair will aggressively raise capacity this winter by 8% (7% in Q3 and 10% in Q4) to take advantage of growth discounts and build out business friendly frequencies from Dublin and Stansted in particular.”

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