Monday 20 November 2017

Ryanair shares soar 10pc as O'Leary predicts prices will rise this summer

Howard Millar, chief financial officer of Ryanair
Howard Millar, chief financial officer of Ryanair
Colm Kelpie

Colm Kelpie

RYANAIR shares closed up about 10pc yesterday, adding about €970m to the value of the company, despite the airline reporting its first slump in profits in five years.

The profit fall wasn't unexpected given last year's warnings and investors were buoyed after the airline predicted a profit rise of up to 18pc this financial year.

The airline's share price ended the trading day at €7.02 – up 10.6pc – although it was still lower than the high of €7.75 recorded on April 10.

The carrier blamed the 8pc fall in pre-tax profits on a decline in fares, the warm summer last year, weak sterling and higher fuel prices. Chief executive Michael O'Leary said the airline had responded quickly to the weaker environment last September by lowering fares and launching an improved customer service campaign.

Passenger numbers are expected to rise by more than 4pc over this year to almost 85 million, leading to a predicted bounce back in profits. And the carrier is forecasting strong summer trading, although it sounded a note of caution for business in the winter.

"While fares fell by 4pc in FY14, we expect FY15 fares to rise by up to 2pc," Mr O'Leary said.

"Forward bookings for summer 14 are significantly ahead of last year, since we began offering lower fares and released our seasonal schedules earlier. This should continue to deliver 2pc higher load factors, and help us manage fares closer to departure as we have less capacity to sell."

Europe's airlines have been battling intense pricing competition in recent months.

Passengers

Ryanair predicted last November that its full-year profit for the financial year that ended last month would fall for the first time in five years as it embarked on its charm offensive to lure more passengers.

The carrier said its marketing and advertising budget would balloon to €35m as the massive campaign continues, which has already seen improved customer service initiatives and a revamped website, as well as an attempt to woo business travellers.

Chief financial officer Howard Millar yesterday predicted a significant increase in business travellers by the autumn.

Net profit for the financial year to the end of last March was €523m – down 8pc from the previous year. But the amount of passengers rose to 81.7m from 79.3m. And revenue was up 3pc to €5.04bn.

Ryanair had predicted its after-tax profit for last year would be between €500m and €520m, while analysts had on average expected the result to be around €515m.

Irish Independent

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