All eyes on Ryanair

Ryanair rattled investors with two profit warnings before Christmas, but things are starting to look up for the airline, which is attempting to woo back customers with fee cuts and lower fares.

The budget airline, which has enjoyed a trend of rising profits and revenues during the last four fiscal years, issued two profit warnings within two months last year. The warnings followed projections that average fares would decrease by 9 per cent for the remaining months of its fiscal year, ending in March 2014.

However, in the time since then, the airline has conceded its “abrupt culture” might be impacting business, and tried to improve its image and broaden its appeal to business travellers. It will thus be interesting to see the airline’s third quarter results, which are due to be published today.

Ryanair has said it will triple its marketing budget this year, in a push to refine its no-frills image, which the company has admitted alienated customers looking for more service. The airline will spend approximately €35 million on advertising, website improvements and other products targeting groups and business travellers.

Ryanair hopes the changes will enable it to make ground on its biggest competitor, EasyJet, which is 18 months to two years ahead in terms of its online presence. EasyJet has stolen a march on Ryanair by introducing measures such as allocated seating and allowing passengers to change their flights.

Davy Stockbrokers have forecast 2014 will be a crucial year for Ryanair as it undergoes improvements in its website and customer proposition and some network repositioning in advance of the new Boeing deliveries. "We remain very positive on Ryanair given that it has the only real sustainable competitive advantage (cost) in the short-haul market; we expect it to grow profitably to 110 million passengers per annum by the end of the decade."