Preferred boarding and seat selection helps boost Ryanair revenues
Shares in carrier up over 8% but airline narrows profit guidance over winter concerns
Ryanair, which also controls Buzz and Lauda, carried almost 86 million passengers in the second quarter, an 11% increase on the same period last year. Photographr: Niall Carson/PA Wire
Preferred boarding and assigned seat booking helped revenue at Ryanair rise 11 per cent in the first half of its financial year to €5.39 billion, the airline said on Monday.
And although scheduled services accounted for €3.74 billion in revenue, that was an increase of just 5 per cent compared to the 28 per cent jump in ancillary revenue to €1.65 billion as more guests chose to pay for add-ons.
Despite beating analyst expectations in posting a net profit of €1.15 billion in the quarter, Ryanair narrowed its full-year profit guidance to between €800 million and €900 million, a change from the previous range of between €750 million and €950 million.
Shares in the company had risen by more than 8 per cent during the day on foot of the results.
The budget airline faced increasing costs in the quarter, with its fuel bill rising 22 per cent to €1.59 billion on the back of higher prices and traffic growth. The Boeing Max debacle has also had an affect on Ryanair which has had to endure higher maintenance costs as older aircraft remain in the fleet on account of the Boeing Max delivery delays.
Those new, fuel efficient aircraft are now expected to be delivered by March or April next year at the earliest and while Ryanair flags these aircraft as a “game changer”, the slow delivery will hurt its growth rate, it said. Additionally, it initially only expects to receive 20 Max-200s for the summer 2020 season having anticipated receiving 58.
Speaking to Bloomberg, Ryanair chief executive Michael O’Leary said the European aviation regulator is “dragging their heels” when it comes to scrutinising the aircraft. He added that Boeing and the US regulator “haven’t been easy to deal with” in recent months but that the manufacturer – who he said he speaks to about once a week – has identified and rectified the issues with the aircraft.
The company, which also controls Buzz and Lauda, carried 85.7 million passengers in the second quarter, an 11 per cent increase on the same period last year.
But its outlook for the rest of the year “remains cautious”, it said. “We try to avoid the unreliable optimism of some competitors.”
With passenger numbers expected to rise 8 per cent to 153 million, the airline anticipates a “slightly better fare environment than last year”. That, however, “remains sensitive to any market uncertainty such as a no-deal Brexit”.
Davy analysts Stephen Furlong and Ross Harvey said they’re likely to raise their price target to €14 (from €12), believing that “some multiple expansion is likely”.
“The juggernaut will continue to expand and get more efficient with Ryanair Labs also launching a new digital platform with improved, personalised guest offers,” they added.