Ryanair Q1 profits rise 4% to €256m

Ryanair last week reported a 4% rise in Q1 profit to €256m, as traffic grew 11% to 31 million while average fare fell 10% to €39.92, offset by a 9% reduction in unit costs.

Ryanair’s Michael O’Leary said: “This modest 4% increase in Q1 profit to €256m is in line with previous guidance. The absence of Easter in Q1 and ongoing market volatility arising from terrorist events and repeated ATC strikes (particularly in France) weakened fares on close-in bookings and caused almost 1,000 flight cancellations. We remain committed to our load factor active/yield passive strategy which is why Q1 fares fell 10% to under €40. Traffic rose 11% and load factor improved 2 points to 94% as our Always Getting Better customer experience programme continues to win new customers and new markets. Ancillary sales rose to 26% of revenues (24% in PY Q1). Cost control remains core which is why unit costs reduced 9% (ex-fuel down 4%). Highlights of Q1 include: • Average fares cut 10% to

€39.92 • Traffic up 11% to 31 million (LF

up 2% to 94%) • Unit costs down 9% (ex-fuel -

4%) • Profits up 4% to €256 million • 16 new B737-800’s delivered • Share buyback programme

(€886m) completed in June

New routes and bases

Our four new S16 bases in Belfast, Corfu, Ibiza and Santiago are performing well with strong advance bookings. We announced eight new bases (Bucharest, Bournemouth, Hamburg, Nuremburg, Prague, Sofia, Timi oara and Vilnius) as part of our W16 schedule which will also see our Berlin base grow from four to nine aircraft and Luxembourg become our 33rd country. We will open 133 new routes during W16. Sadly, the introduction of an NOK80 (€8.50) air travel tax in Norway has led to 16 route cancellations and the closure of our Oslo Rygge base in October.

AGB customer experience

Year 3 of AGB was unveiled in April and continues to improve our customer experience through service, digital and inflight developments. In addition to lower fares and wider destination choices, our customers now enjoy new initiatives such as Leisure Plus, improved Business Plus (with more flexible ticketing) and one-flick payments on our mobile app. In June, we simplified and cut checked bag fees for 92% of our customers.

Our industry leading on-time performance fell in Q1 from 91% last year to 87% due to adverse weather (thunderstorms) and a succession of unjustified ATC strikes in Belgium, Italy, Greece and especially in France. UK NATS has also mismanaged its staffing rosters leading to repeated slot capacity restrictions and delays at London Stansted.

French ATC unions alone have engaged in 53 strikes over the past seven years during a period when Irish and UK ATC suffered zero strikes. Ryanair and other airlines have called on the European Commission to take three simple measures to alleviate the impact of these ATC strikes on Europe’s citizens as follows:

Require (French) ATC unions believe our FY traffic will grow by 10% to 117 million customers (up 1 million on previous guidance).

Average fares on close-in bookings have been adversely impacted by ATC strikes, terrorist events and weaker sterling post Brexit. As a result, we expect Q2 fares to fall by at least 6% (H1: - 8%). This outcome remains heavily dependent on close-in bookings for August and September. We have little visibility over W16 fares but see no reason yet to alter our guidance of -10% to -12% in H2. If there is any movement in these numbers it is more likely to be towards the downside.

Ex-fuel unit costs should reduce by approximately 1% in FY17. Much of these savings will be delivered in the first half of the year, due to slower traffic growth this winter (particularly Q4) compared to last year. Our fuel bill will fall by approximately €200m as lower euro pricing is offset by volume growth, but it is now likely that most if not all of these savings will be passed on to customers in lower fares.

At this time, we maintain our guidance, that full year profits will rise by approximately 12% to a range of €1,375m to €1,425m but we caution that post Brexit there are significant risks to the downside during the remainder of the year.