Ryanair eyes 75pc of business market as sales boom
Published 29/07/2014 | 02:30
Ryanair reckons it can grab 75pc of all business travel between Ireland and the UK over the next three to five years, setting an ambitious target after delivering knock-out first quarter results.
The airline is launching its business product offer in September in a bid to lure business travellers away from airlines such as Aer Lingus, British Airways and Cityjet, which account for the bulk of such passenger traffic between Ireland and the UK.
Speaking to the Irish Independent, Ryanair chief marketing officer Kenny Jacobs said that he believes the airline can snatch two-thirds of the business travel market between Dublin and London and 75pc of all business traffic between Ireland and the UK.
Ryanair is grounding fewer planes this coming winter (50 compared to 90 last year) as it launches its business product and maintains the types of frequencies and destinations that business travellers will expect.
Last year, almost 9.7 million passengers flew between Ireland and the UK, according to data from the UK's Civil Aviation Authority. Mr Jacobs said he reckons that about half of those are business passengers.
About 3.8 million passengers travelled to the main London airports last year from Dublin.
Ryanair said that its first quarter pre-tax profit soared 152pc to €197m as revenue climbed 11pc to almost €1.5bn, boosted by Easter. It carried 24.3 million passengers in the period, 4pc more than it did in the first quarter last year.
The results were well ahead of analysts' expectations, and the airline raised its full-year profit guidance to a range between €620m-€650m compared to €580m-€620m previously. Its shares rose more than 5pc in early trading. The airline issued two profit warnings last year.
Ryanair also said it will return €520m to shareholders in the fourth quarter via a special dividend.
But it warned investors not to succumb to "irrational exuberance", pointing out that the second half of the financial year will be challenging as fare competition among it and rivals intensifies. Mr Jacobs denied there would be an all-out fare war.
Analysis: O'Leary will make €19m from dividend
Ryanair shareholders should expect the airline to keep making share repurchases and awarding special dividends despite having to fund the purchase of 180 aircraft from Boeing, according to chief marketing officer Kenny Jacobs.
The airline's chief executive, Michael O'Leary, will be one of the biggest beneficiaries of the €520m special dividend that it expects to pay in the fourth quarter. He recently added to his stake in Ryanair, bringing it to 3.71pc.
With Ryanair paying a 37.5 cent a share dividend, he'll be in line for a bumper pre-tax windfall of €19.2m.
Since 2008, Ryanair will have spent €2.5bn on share buybacks and special dividends once the €520m is distributed to shareholders.
Ryanair issued its first corporate bond this year, raising €850m to help fund its Boeing order. Other bonds will follow. But Mr Jacobs said that Ryanair still had the capacity to continue rewarding shareholders.
"There's no guarantee, but shareholders can go on past form."
With a revamped offering for passengers, Ryanair reckons it's now reaping the rewards of treating passengers like customers rather than statistics.
It will be releasing its summer 2015 schedule in September to help cement forward bookings. Kenny Jacobs said there will be fare price "skirmishes" on particular routes. Ryanair's capacity will be 8pc higher this winter than last, with nearly half of those extra seats being targeted at Dublin and Stansted.