Ryanair raises profit forecasts amid aggressive plans for European growth

Budget operator plans to to open bases this winter at Cologne, Gdansk, Warsaw and Glasgow

Ryanair raised its full-year profits guidance after more than doubling first- quarter earnings and setting out aggressive plans for expansion in Europe.

The news comes after the budget airline announced in May it was returning to Cardiff Airport after an eight year absence.

The operator has invested in a route from Cardiff to Tenerife.

Ryanair chief executive Michael O’Leary said it was “overrun with growth offers” from airports on the continent as rivals scaled back operations.

But he warned against “irrational exuberance” as the second half of the financial year was likely to see downward pressure on fares as a result of competition and Ryanair’s increased capacity. Shares opened 5% higher.

Profits after tax for the Dublin-based carrier in the first quarter to June 30 were up 152% to 197 million euros (£156m) though Mr O’Leary said this was distorted by the absence of Easter in the same period last year.

The carrier said more passengers, fuller flights and shaved costs meant full-year earnings were now expected at 620-650 million euros (£491-£514m), up from 580-620 million euros (£459-£491m).

For the first quarter, passenger numbers were up 4% to 24.3 million and they travelled on planes that were 86% full after a rise in load factor of 4%.

Revenues were up 11% to 1.34 billion euros (£1.06bn) as fares rose 9%, boosted by a strong Easter period.

The carrier managed to raise “ancillary” revenues by 4% as reductions in airport and baggage fees were offset by a rising uptake of allocated seating.

Mr O’Leary said four new bases at Athens, Brussels, Lisbon and Rome were “performing strongly” with bases due to open this winter at Cologne, Gdansk, Warsaw and Glasgow.

Routes and frequencies at Stansted and Dublin are due to increase “substantially” while there will be more investment to make routes attractive to business customers.

Mr O’Leary added: “We are overrun with growth offers from primary European airports whose incumbent flag and regional carriers continue to cut capacity and traffic.

“These new airports along with our existing 69 bases offer Ryanair significant growth opportunities as the first of our 180 new Boeing order delivers this September.”

A business service will be launched in September to include same-day flight changes, bigger bag allowances, premium seat allocation and fast-track through security at many airports.

The carrier plans to return 520 million euros (£411m) via a special dividend to shareholders in the fourth quarter.

Mr O’Leary said that, based on the first quarter results and forward bookings, it was clear the firm is on track for a strong first half.

“However we would strongly caution both analysts and investors against any irrational exuberance in what continues to be a difficult economic environment, with some company-specific challenges in H2,” he added.

Sourced from walesonline

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