Ryanair half-year profits tops €1bn

Ryanair has posted half-year profits (pre-exceptions) for its 2015-16 financial year (1H16) of €1.088 billion, up 37% over the 1H15 figure of €795 million.

The number of booked seats in 1H16 grew 13% to 58 million with the load factor climbing 4% points to 93%. Average fares rose 2% as unit costs including fuel fell 6% – excluding fuel, costs remained flat.

The exceptional accounting gain during 1H16 was the €317.5 million made on the sale of Ryanair’s shareholding in Aer Lingus.

“We are pleased to report this strong set of H1 results. We have enjoyed a bumper summer due to a very rare confluence of favourable events including stronger sterling, adverse weather in northern Europe, reasonably flat industry capacity and further savings on our unhedged fuel,” declared Ryanair CEO Michael O’Leary.

During 1H16 Ryanair became the first EU airline to carry more than 10 million customers in one month, initially in July but then repeating the feat in August. During the winter flight programme, Ryanair will open 4 new bases (Berlin, Corfu, Gothenburg and Milan) and 119 new routes including a four times daily Dublin–Amsterdam route, a six times daily Cologne–Berlin service, and three routes to Eilat Ovda (Israel) from Budapest, Kaunas and Krakow.

O’Leary note that the continuing success of Ryanair’s Always Getting Better (AGB) programme is driving stronger forward bookings, higher load factors, and accelerating traffic growth. “Having raised our full year traffic target from 103 million to 104 million in September, we are now raising it again to 105 million, which is 16% higher than last year’s 90.6 million,” he announced. “In the next six months, customers will enjoy further improvements including our personalised website, new cabin crew uniforms, inflight menus, new Sky interiors, better seating and defibrillators fitted on all our aircraft.”

Ryanair has taken advantage of the aforementioned oil price weakness in summer 2015 to further extend fuel hedges to 95% cover for FY17 at an average rate of $62 a barrel. “Having already hedged our US dollar operating expenditure, we expect these hedges to deliver fuel savings of some €430 million in FY17. We plan to pass on these savings to our customers in the form of lower airfares particularly as we grow capacity quickly in major markets such as Belgium, Denmark, Germany, Ireland, Italy, Poland, Portugal, Spain and the UK in 2016,” O’Leary explained.

“Customers will also benefit from our successful US dollar hedge programme. Our aircraft capital expenditure out to March 2018 is fully hedged at an average €/$ rate of 1.31 which means we will be adding these new Boeing 737-800s to our balance sheet at lower euro prices than most of our existing fleet,” the CEO continued. “This combination of lower aircraft and fuel costs will enable Ryanair to continue to lower fares and grow market share while extending our unit cost leadership over all airline competitors in every market we fly in Europe.”

O’Leary closed with a note about guidance for the airline’s full FY2016 results. “We now guide that full year net profit (pre-exceptions) will be towards the upper end of our €1,175 million to €1,225 million range. However, we caution that this guidance is heavily dependent on the strength of close-in bookings in 4Q16 where we have almost zero visibility yet are planning to deliver 22% traffic growth. Looking beyond the current year, based on these stronger than expected load factors, we have raised our long term traffic target from 160 millon to 180 million customers per year by FY24.”

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