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Ryanair raises full year profit guidance by 25%

Ryanair has issued a trading statement raising its full year net profit guidance by 25% from a current range of between €940m and €970m to a new range of between €1.175bn and €1.225bn due to stronger than expected peak summer traffic and prices.
The primary reasons for an increase in net profit guidance include a 13% growth in traffic during the first half of 2015 (1H15) which was previously forecast to be 10%, as well as a 2% growth in fares, which the carrier had suspected would remain flat.Likewise, after Ryanair thought traffic growth for the third quarter of 2015 (3Q15) would be around 13%, it has now raised its predictions to accommodate a 15% growth in traffic, with fares now predicted to remain flat rather than decreasing by between 4% and 8%.Finally, the airline has increased its traffic guidance for the full year to 104 million, one million more than previously stated, as well as predicting lower than expected prices for unhedged fuel.The carrier has cautioned that its full year result remains heavily dependent on close-in bookings in 3Q15 (currently 30% sold) and 4Q15 (currently zero visibility). Ryanair continues to expect downward pressure on fares and yields this winter as it grows strongly in major EU markets such as Germany at a time when competitors will begin to benefit from lower oil prices as historic hedges unwind.“We have been surprised by the strength of close-in bookings and fares this summer during which we delivered record 95% load factors in both July and August while fares grew by over 2%, when we had expected them to be flat,” explained Ryanair’s CEO, Michael O’Leary. “During a year when Ryanair will grow traffic by more than 13 million customers per annum, it’s clear that consumers all over Europe are delighted by and are switching to, our ‘Always Getting Better’ customer experience programme, our industry leading punctuality and our unbeatable low fares.“We would caution that not all of this improvement is due to either our model or our management. As a ‘load factor active/yield passive’ airline we have clearly benefited from favourable industry trends this summer including bad weather in Northern Europe, stronger sterling encouraging more UK families to holiday in the [Mediterranean], reasonably flat capacity across the EU industry and lower prices for our unhedged oil. Being the airline industry we do not expect these favourable conditions will persist, and we would urge shareholders and analysts to avoid irrational exuberance while we continue to execute our very ambitious growth plans during what we expect to be very attritional and sustained fare wars across Europe this winter.”The airline had originally planned to update shareholders on current trading at its AGM on 24 September 2015, but instead decided to bring the announcement forward. It has also confirmed the successful recovery all of the funds (less than $5 million) that were the subject of a fraudulent electronic transfer to a Chinese bank in April. Steps have been put in place to ensure that such a transfer cannot recur.

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