Ryanair upgrades forecast as half-year pretax profits rise 10%
Strong post-Olympic bookings, a 6 per cent increase in fares and a lower than forecast fuel bill saw pre-tax profits jump by 10 per cent at Ryanair in the first half of the year.
The results surpassed the low-cost airline’s expectations, and it has now upgraded its full-year profit forecast to €490- €520 million from a previous guidance of €400-€440 million, as it targets new markets.
For the six months to September, the airline reported a pre-tax profit of €679.3 million on revenues of €3.1 billion, up 15 per cent on the previous year.
Total revenue per passenger increased by 7 per cent, while traffic also rose by 7 per cent – the airline carried 48 million passengers. Its average fare rose by 6 per cent to €53 and unit costs were up 8 per cent due to a 24 per cent, or €218 million, increase in fuel costs.
“Profits exceeded our expectations driven by a combination of strong summer bookings, particularly post the Olympics, a 6 per cent rise in average fares, and lower than forecast fuel bill due to the successful implementation of our fuel savings programme,” chief executive Michael O’Leary said, adding that market conditions would, however, remain tough.
The airline continues to increase revenues raised from ancillary, or non-ticket, sources, such as baggage fees, on-board food and services and reserved seating. In the first half of the year, these revenues jumped by 20 per cent to €583.8 million.
Ancillary revenues now account for almost a quarter of the airline’s revenues and could be set to rise even further. Some low-cost airlines had begun charging for in-cabin luggage, and deputy managing director Michael Cawley said Ryanair would consider following suit.
The airline’s financial position also improved in the first half of the year, with gross cash growing by €417 million to €3.9 billion. It is set to pay a special dividend of €489 million, or €0.34 a share, on November 30th. Looking ahead, growth is on the agenda for the airline.
“The market potential for us to expand is phenomenal,” said Mr Cawley, noting that while Ryanair may be the largest airline for intra-European air travel, it only has a 12 per cent share of the market. In this regard, Ryanair says it is “legitimate” to target an 18 per cent plus share of the market. It hopes to achieve this by increasing its traffic by up to 50 per cent to approximately 120 million passengers a year over the next decade.