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LONDON (Alliance News) - Ryanair Holdings PLC Monday raised its guidance for the current financial year, after reporting strong growth in profit and revenue in the first half, driven by higher passenger numbers, average fares and lower fuel costs.
Europe's largest low-cost airline reported a net profit of EUR795 million for the six months to September 30, up from EUR602 million a year earlier, as revenue grew to EUR3.54 billion, from EUR3.26 billion.
It said it now expects profit for the full year to be between EUR750 million to EUR770 million, up from its previous guidance of EUR650 million, although it cautioned that this will depend on booking strength in the third and fourth quarters, where it currently has little visibility.
The Irish airline flew 51.4 million passengers in the first half, up from 49.2 million a year earlier, while average fares rose 5% to EUR54. Its unit costs fell by 25, although they were up 3% excluding fuel.
Ryanair now expects traffic to grow 12% on the year in the third quarter, and 20% in the fourth quarter.
"We believe it is time to capitalise upon the many opportunities available to us at both primary and 4 secondary airports, to grow our route network and increase frequencies, in order to attract business traffic which tends to travel more during the winter period," it said in a statement.
It now expects full year traffic to grow by 9% to 89 million customers, and average fares for the year to rise by just 1% to EUR47. It expects unit costs for the year to be flat.
It has also revised its medium-term traffic guidance higher, and now expects to double to 150 million customers a year by 2024.
The airline attributed some of the increase in passenger numbers to its recent decision to introduce a business traveller package and to improve its customer service. It had admitted that it was too tough and uncompromising with passengers previously and has set out to soften its stance.
"While partially due to the presence of Easter in the first quarter and a weak prior year comparable, we have also enjoyed a strong summer thanks to our strategy, of raising forward bookings and improving our customer experience which has delivered higher load factors and yields," it said.
It said forward bookings for December to March are continuing to run 5% on average ahead of this time last year.
Ryanair also said it has taken advantage of the recent fall in oil prices to extend its fuel price hedging. It is now hedged for 90% of its fiscal 2016 fuel needs at about USD93 a barrel. It said this would result in a 2% reduction in unit fuel costs in euro terms over the next 12 months.
"We will now look for opportunities to extend our fuel hedging programme into FY17 to lock in future cost savings," it said.
The airline has also extended its capital expenditure programme to September 2017 at an average exchange rate of ?/$1.35, "which locks in substantially lower costs for the new aircraft deliveries", it said.
Ryanair shares were up 8.9% at EUR8.27 in London Monday morning. Rival easyJet PLC was also up 2.7% at 1,540.00 pence, the best-performing stock on the FTSE 100.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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