Ryanair reports strong 1H profit; raises full-year earnings guidance

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Published: November 8, 2011

Ryanair 737-800. Courtesy, Boeing

Ryanair (FR) reported net profit of €543.5 million ($ 750 million) in the first half ended Sept. 30, up 20.2% compared to adjusted net profit of €451.9 million in the year-ago period. Including exceptional items, earnings jumped 28% from €424 million to €543.5 million. Adjusted net margin was 20%.

Revenue rose 24% to €2.7 billion, on a 12% growth in passengers carried to 44.7 million and a 13% hike in average fare to €50. Ancillary revenues grew by 15% to €486.5 million. Revenue per passenger rose 11% to €63.

FR CEO Michael O’Leary said the solid income growth is “a testament to the strength of Ryanair’s lowest fare/lowest cost model, which delivered robust traffic and profit growth despite significantly higher oil prices and an economic downturn in Europe.” He attributed the 13% rise in average fares (which include baggage fees) to the slower growth, a better mix of new routes and bases, “as well as rising competitor fares/fuel surcharges.”

Europe’s largest low-cost carrier will proceed with its previously announced planned capacity cuts in its fiscal second half and ground up to 80 aircraft this winter due to higher oil prices ( ATW Daily News, May 24 ). Consequently, it expects traffic to fall in the second half by 4%, including a noteworthy decline of 10%, or almost 500,000 passengers in November, whereas the average ticket prices are expected to rise by up to 14%, slightly better than the 12% in its previous earnings guidance, O’Leary said.

The better-than-average ticket prices prompted FR to raise its full-year net profit guidance by 10. It now expects to earn €440 million, compared to €400 million forecast earlier in the year.

Fiscal first-half operating expenses increased 26% to €2.06 billion, primarily owing to an increase in fuel prices, the higher level of activity and operating costs associated with the airline’s growth. Fuel, which represents 44% of total operating costs compared to 40% in the prior period, increased by 37% to €907 million. Unit costs, ex-fuel, increased by 6%. Load factor remained flat at 85%.

FR ended its fiscal first half with 275 Boeing 737-800s, which operate more than 1,500 daily flights. Its network spans more than 1,300 routes connecting 160 airports in 27 countries.

Deputy CEO and CFO Howard Millar told analysts that the company will be meeting with Commercial Aircraft Corp. of China (COMAC) and Boeing later this month as it looks to place an order for up to 300 aircraft for fleet replacement and growth.

FR revealed it had signed a memorandum of understanding with COMAC at the Paris Air Show in June to develop a 200-seat aircraft ( ATW Daily News, Sept. 22 ).

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