‘Modest’ Ryanair profits soar

The airline, which flies to 27 destinations from Leeds Bradford, reported a six per cent increase in average fares.

Income from extra services such as baggage, reserved seating and onboard food and drink, rose by 20 per cent to £846m, making up 22 per cent of all sales.

Net profit reached £480m in the 12 months to the end of March, ahead of forecasts.

The shares jumped nearly seven per cent yesterday to close at a record high of 6.75 euros (£5.70).

But the company warned that the recession in Europe could hit growth this year.

It is also having to cope with higher fuel costs and a wait for new plane deliveries.

The airline flies from Leeds Bradford to a wide range of winter and summer sun holiday destinations.

It has based a third aircraft at Leeds Bradford airport which added six new routes from Leeds Bradford to Chania (Crete), Corfu, Dinard, Kos, Milan (Bergamo) and Tenerife and extended its Kaunas and Riga routes to its summer schedule.

Ryanair’s chief financial officer Howard Millar said the company is making a cautious forecast for the current year due to poor visibility on bookings in the second half of the year.

“We are extraordinarily modest at the start of the year,” he said.

The company, which has more than 1,600 routes, carried 79.3 million passengers in the year to March 31, an increase of five per cent on last year as revenues improved by 13 per cent to £4.1bn.

Post-tax profits rose to £481.4m and the airline is hopeful of another rise this year, albeit at a slower rate as economic conditions put pressure on average fares across the industry.

Ryanair expects traffic to grow by another two million passengers to 81.5 million in the current year, helped by this summer’s addition of more than 200 routes and seven new bases, including Eindhoven, Krakow and Marrakech.

It said costs will continue to rise, with higher oil prices to blame after its fuel bill increased by £245.3m in the last financial year.

Fuel now represents 45 per cent of all the airline’s costs.

With Ryanair hoping to carry more than 100 million passengers a year by the end of 2018, it recently announced plans for the delivery of 175 new Boeing aircraft.

Chief executive Michael O’Leary said: “Ryanair is now uniquely positioned to offer many of Europe’s airports sustained traffic growth in return for low cost, efficient facilities.

“I am confident that in time this new order will enable Ryanair to extend its traffic leadership over Europe’s airlines, and generate further returns for our shareholders.”

The group warned that profit growth could stall in the year ahead, with profit coming in at between £482m and £507m, an increase of between zero and five per cent.

A year ago Ryanair had forecast profit of between £338m and £372m for the year to March 2013.

Davy stockbrokers analyst Stephen Furlong said: “It’s not unusual that the guidance is quite cautious, but they are still forecasting higher profits.

“Their cash generation remains spectacular.”

The company had net cash of £51.5m at the year end despite having returned £422m to shareholders in November.

Ryanair expected to see passenger growth slow to three per cent from five per cent last year, as it waits for deliveries to begin on 175 Boeing jets it ordered in March.

Most of that increase will come from a five per cent increase in capacity in the traditionally weaker winter period, when pressure on yields is more intense.

Mr O’Leary said: “With almost zero yield visibility into the second half and the EU-wide recession, we expect that there will continue to be downward pressure on yields which will dampen full-year profit growth.”

He said that in the year as a whole, revenue per passenger mile is expected to rise modestly as prices for oil and air traffic control charges eat into the forecast three per cent growth in capa- city.

Net profit in the first quarter to the end of June will be lower as the busy Easter period fell in the fourth quarter.

Bookings on new routes and bases in the coming summer are ahead of expectations, but the company warned that average fares would be modest.

Donal O’Neill, an analyst with Goodbody Stockbrokers, said: “They are playing down the yield environment, saying the first quarter is softer than last year, but I’d be quite confident of a very good outrun in their peak summer trading period.”

Panmure Gordon analyst Gert Zonneveld said: “Despite the tough market conditions we expect average fares to rise in the coming years, driven by a relative modest capacity growth and higher competitor fares, which should translate into attractive and sustainable profit growth.”

Ryanair’s largest low-cost rival easyJet last week said it expected four per cent growth in revenue per seat in the next six months and improved profitability for the full-year.

Ryanair shares are up 50 per cent since the start of the year, compared with a rise of some 55 per cent at rival easyJet and 18 per cent in the Irish stock market as a whole.

Airline flying ever higher

Ryanair’s latest customer statistics reported that a record 93 per cent of flights left on time, up from 89 per cent the previous year.

It reported less than one complaint per 2,000 passengers with complaints per thousand passengers falling from 0.70 per cent to 0.48 per cent.

It added that there was less than one bag complaint per 3,000 passengers. Bag complaints fell from 0.39 per thousand passengers to 0.32 per thousand passengers.

Complaints answered within seven days stayed static at 99 per cent.

Ryanair’s head of communications Robin Kiely said: “During April, a record 93 per cent of 49,000 flights arrived on time, as Ryanair continued to raise the bar in airline performance.

“Ryanair’s unbeatable formula of the lowest fares, no fuel surcharges and number one customer service delivery continues to encourage passengers to switch from Europe’s high fare, fuel surcharging flag carriers such as Air France, BA and Lufthansa – which is why we’ll carry over 80m passengers this year.

“Once they have switched to Ryanair’s prices, these passengers keep coming back for our unbeatable on-time flights, fewest lost bags and great customer service.”