Cantillon: Aer Lingus sale lands Ryanair €317m

Ryanair recorded a once-off €317.5 million gain from last August's sale of its Aer Lingus stake to International Consolidated Airlines' Group (IAG) in the interim accounts that it published on Monday.

The €398 million that IAG paid for the 29.8 per cent stake amounts to more or less what Ryanair spent on building up its position in Aer Lingus in the first place. However, subsequent movements in its rival’s share price forced the airline to write down the value of those equities to 50 cent each, meaning that it took exceptional losses in previous financial statements as a result.

The €2.50 per share it received for the holding in August means it was able to record a once-off gain from the transaction. It has already decided to return the entire €398 million to shareholders in a b-share scheme. Leaving aside those transactions, the airline recorded a 37 per cent jump in after-tax profit to just short of €1.01 billion for the six months to the end of September, the first half of its financial year. On the basis that 58 million people flew with it over those six months, it made an average of €17 profit on every passenger. Unit costs were down 6 per cent as the benefit of lower oil prices kicked in. However, even excluding that, the airline still expects those costs to be down 1 per cent in the current financial year. At the same time, planes were fuller. On average the airline sold 93 per cent of all available seats during the six-month period, compared to 89 per cent during the same months in 2015. As a result, its fares were slightly higher, up 2 per cent at €56.

Putting it all simply: it carried more people, who paid a bit more for their seats and the cost of doing that fell. Ryanair itself pointed out that a number of other favourable factors also came into play. They included a poor summer in northern Europe, which prompted more people to head off to the sun, and sterling's strength against the euro, boosting returns from the UK. It sounded a note of caution for the second half, which coincides with the traditional weaker air travel months. At least some of those favourable factors are unlikely to come into play during that time. However, at this point, it looks like it has comfortably made it past all key milestones that it set out for the first half.