Ryanair posts higher profit, reaches passenger milestone
LONDON – Ryanair Holdings PLC posted a 43% rise in net profit in its latest fiscal year when the number of passengers passed 100 million for the first time, but warned that worries about terrorism could push falling airfares even further down.
Europe's largest budget carrier by traffic said on Monday that net profit rose to €1.24 billion ($1.39 billion) in the year to end-March from €867 million the previous year, partly reflecting lower fuel costs after the slump in oil prices.
Ryanair also benefited from flying fuller planes and a focus on passengers willing to pay for extras, such as fasttrack security clearance at airports.
Revenue rose to €6.54 billion from €5.65 billion on an 18% jump in passenger traffic, with the Irish airline carrying 106.4 million passengers in the year, a new Ryanair record. The airline's planes were packed, with the load factor, a measure of seats sold, up at 93%.
After the bumper profit growth, Ryanair forecast a more modest pace for earnings improvement for the financial year that began in April. "Fares are the biggest question mark," said Chief Financial Officer Neil Sorahan.
The crash for still undetermined reasons of an EgyptAir flight Thursday flying from Paris to Cairo with 66 people on board already is impacting sales, Chief Executive Michael O'Leary said. The pace of new bookings weakened immediately on May 19, the day the plane went down, with softness in sales seen since then.
Ryanair said ticket prices in the fiscal fourth quarter fell after the Brussels attacks and subsequent air-transport strikes.
Europe's other leading airlines have recently warned that the terror attacks in Brussels in March have taken their toll on bookings, with ticket prices expected to weaken amid strong competition. Some carriers, including British Airways-parent International Consolidated Airlines Group SA, have trimmed capacity growth and accelerated cost-cutting efforts to compensate for the fall in ticket prices.
Even absent the external shocks, Mr. O'Leary said fares were poised to fall sharply this year. Ticket prices in the peak summer period are likely to be flat or slightly down on last year. With the lower fares, "forward bookings this summer are good," Mr. O'Leary said.
The looming fare-war is poised to slow Ryanair profit growth this year. Profit should rise only around 13% to €1.38 billion to €1.43 billion, the Dublin-based airline said. The carrier's earnings guidance at the start of a fiscal year is usually conservative and often adjusted upward in subsequent months.
The airline expects to carry around 116 million passengers this year and maintain its packed planes with around 93% of seats sold on a typical flight.
Average fares should fall about 7% as Ryanair cuts ticket prices to lure passengers.
"If there is a surprise. it may be on the downside, rather than the upside," Mr. O'Leary warned. Ticket prices in the peak summer season, when airlines make most of their money, could fall as much as 3%, he said. (WSJ)