Transport Airlines

Ryanair Profits More Than Double After Business Travel Push and Charm Offensive

Jul 28, 2014 9:30 am

Skift Take

CEO Michael O’Leary’s plan to stay out of the limelight so that the focus can be on Ryanair’s performance looks like it’s beginning to pay off.

— Jason Clampet

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A line of Ryanair's Boeing jets. Ryanair

Ryanair Holdings Plc lifted its fiscal full-year profit goal after saying first-quarter profit more than doubled as it filled more seats and benefited from strong Easter travel.

Profit after tax for the year through March 2015 probably will be 620 million euros ($833 million) to 650 million euros, an increase from a previous guidance of 580 million euros to 620 million euros, the Dublin-based airline said in a statement today. Profit after tax for the three months ended June 30 more than doubled 197 million euros from 78 million euros, as sales increased 11 percent to almost 1.5 billion euros.

Europe’s biggest discount carrier has forecast a return to growth this year after the first profit decline in five years, as it refines its no-frills approach to draw business passengers, older travelers and families in a bid to fly more people. Measures include allocated seating, reduced bag charges and a simplified website. Full-year traffic will grow about 5 percent to 86 million people, helping the airline raise its full-year profit guidance, Ryanair said.

“We are going to invest in our route network this winter,” Chief Financial Officer Howard Millar said in a telephone interview. The boost in “profit guidance is due to a larger number of passengers, which reduces unit costs, so its a cost driven increase in guidance,” he said.

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Traffic for the quarter climbed 4 percent to 24.3 million people, with average fares gaining almost 9 percent because of Easter falling within the quarter, which it didn’t last year. The airline also began selling its summer schedule earlier and promoting forward bookings, which helped drive load factors.

While the carrier said it is on track to deliver a “strong” first half, it warned cautioned against “irrational exuberance in what continues to be a difficult economic environment.” The pricing environment in the second-half is likely to be “much softer,” as competitors lower fares and Ryanair boosts winter capacity by 8 percent.

The Irish carrier, targeting 110 million passengers by 2019, and discount rival EasyJet Plc are looking to expand their networks as former flag carriers undertake the latest revamps of their short-haul units. Deutsche Lufthansa AG and Air France-KLM Group have bolstered European offerings and British Airways- owner International Consolidated Airlines Group SA has bought new planes for Spanish unit Vueling.

To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net. To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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