Ryanair shares at all-time high after airline raises full-year guidance

Ryanair has raised its full-year net profit guidance by 25 per cent from a current range of €940 million to €970 million to between €1.175 billion to €1.225 billion.

Shares in the airline hit an all-time high after the announcement, rising 10 per cent to €14.27 in early trading.

Ryanair said the improved guidance - which is up 40 per cent on the prior year - was due to a number of factors, including stronger-than-expected peak summer traffic, a rise in prices and the continued success of its customer experience programme.

The airline said it had planned to update shareholders later this month at its annual general meeting but said the strength of its numbers and the scale of the upgrade required it to bring the announcement forward.

Ryanair also confirmed on Wednesday that it has successfully recovered all of the funds (less than $5million) that were the subject of a fraudulent electronic transfer to a Chinese bank in April. It added that steps have been put in place to ensure that such a transfer cannot recur.

The airline said first-half traffic was up 13 per cent against a previously guided 10 per cent while fares were up 2 per cent. It added that third quarter growth is likely to rise by 15 per cent versus a previously guided 13 per cent, while fares will likely be flat.

Full-year traffic is forecast to rise to 104 million passengers as against a previously guided 103 million.

“We have been surprised by the strength of close-in bookings and fares this summer during which we delivered record 95 per cent load factors in both July and August while fares grew by over 2 per cent, when we had expected them to be flat,” said chief executive Michael O’Leary.

“During a year when Ryanair will grow traffic by more than 13million customers per annum it’s clear that consumers all over Europe are delighted by and are switching to, our “Always Getting Better” (AGB) customer experience programme, our industry leading punctuality and our unbeatable low fares,” he added.

Ryanair cautioned that its full-year result remains heavily dependent on close-in bookings in the second half of 2015. Currently 30 per cent of close-in bookings have been reported for the third quarter but there is zero visibility on the final three months of the year.

The airline said it continues to expect downward pressure on fares and yields this winter as it grows in major EU markets such as Germany, at a time when competitors will begin to benefit from lower oil prices as historic hedges unwind.

“We would caution that not all of this improvement is due to either our model or our management. As a “load factor active/yield passive” airline we have clearly benefited from favourable industry trends this summer including bad weather in Northern Europe, stronger sterling encouraging more UK families to holiday in the Med, reasonably flat capacity across the EU industry and lower prices for our unhedged oil,” said Mr O’Leary.

“Being the airline industry we do not expect these favourable conditions will persist, and we would urge shareholders and analysts to avoid irrational exuberance while we continue to execute our very ambitious growth plans during what we expect to be very attritional and sustained fare wars across Europe this winter,” he added.