Ryanair shares take off after new €1bn-plus profit forecast
Ryanair shares soared as much as 10pc yesterday to their highest level in two years after the airline raised its profit guidance for its current financial year following a bumper Christmas and new year period.
The share boost - the biggest single-day advance since 2008 - lifted the group's market capitalisation to more than €18bn.
The airline now expects to make a profit after tax of between €950m and €1.05bn in the 12 months to the end of next March. That compares with a previous estimate of between €800m and €900m.
Ryanair CEO Michael O'Leary could earn as much as a €100m share bonus if the carrier's share price exceeds €21 for a period of 28 days between April 1, 2021 and March 31, 2024, or if the airline's profits exceed €2bn in any one year up to 2024.
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The shares were hovering around €16.40 by yesterday afternoon.
Ryanair said it had benefited in recent weeks from more close-in bookings at better-than-expected ticket prices.
It added that forward bookings for January to April travel were also running 1pc ahead of this time last year.
However, Ryanair said that its wholly owned Austria-based carrier Lauda had continued to be hit by price competition.
It is expected to make a net loss of about €90m in the current financial year, compared with the less than €80m loss that had been anticipated.
Ryanair warned that average fares at the Vienna-headquartered unit were lower than expected over Christmas, despite strong traffic growth and high load factors.
"This is a direct result of intense price competition with Lufthansa subsidiaries in both Germany and Austria, who are engaged in below-cost selling," the firm insisted.
Lauda now expects to carry 6.5 million passengers in the 12 months to the end of next March, but at average fares that are €15 below budget, according to Ryanair.
Last August, Lauda warned staff that it may have to cut jobs unless productivity could be improved and it started making a profit.
Just days earlier, Ryanair had reported that its net income in the first quarter of its 2020 financial year had tumbled 21pc to €243m.
It also warned that as many as 900 jobs were at risk.
The airline has also announced plans to close some bases, as its passenger growth is crimped because of the continued Boeing 737 Max grounding.
But Davy Stockbrokers - Ryanair's own broker - said momentum for the carrier into next summer in what is a tight market "will be powerful".