Sunday 19 November 2017

Ryanair shares surge 10pc on profit upgrade to €1.2bn for year

Composite Image: Ryanair chief executive Michael O'Leary, with Cork Airport in the background.
Composite Image: Ryanair chief executive Michael O'Leary, with Cork Airport in the background.

Paul O'Donoghue

Ryanair shares surged 10pc after it hiked its annual profit forecast by 25pc, after its summer performance was boosted by bad weather in northern Europe, higher prices and strength of the pound.

It was the top riser on the pan-European FTSEurofirst 300 as it significantly raised its full year net profit guidance by 25pc from a current range of €940m to €970m to a new range of €1.175bn to €1.225bn.

The upgrade was contained in a trading update released this morning. The airline, which was due to update shareholders on its current trading at the company’s annual general meeting on September 24, said that the “strength of its July and August numbers, [which] is continuing into September”, required the update be brought forward.

Ryanair said that the raise was due to several factors including a higher than expected traffic increase in the first half of the year (up 13pc as opposed to an expected 10pc), an increase in fares (up 2pc vs a previous flat guidance) and traffic  growth in the third quarter of the year (15pc vs a previously guided 13pc).

The company cautioned that its full year result remains heavily dependent on close-in bookings in Q3, which is currently 30pc sold, and Q4, in which it currently has zero visibility. 

The company also said that it has recovered all of the funds (less than $5m) that were the subject of a fraudulent electronic transfer to a Chinese bank in April. 

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

"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."

He added: "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”.

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