Posted on: 01 February 2016 by Ross McSweeny
Ryanair has reported 3Q16 profits of €103 million, a 110% increase on 3Q15, with traffic growing by 20% over the respective periods to 25 million.
Average fares fell 1% to €40 but load factors rose by 5 percentage points to 93%. Unit costs fell by 5%, equating to a 1% drop when excluding fuel.
Ryanair’s CEO Michael O’Leary commented, “We are pleased to report that our low fares policy delivered strong Q3 traffic and profit growth. Following a strong first half of 3Q16, we noted weaker pricing and bookings immediately after the terrorist events in Paris and Brussels. We reacted to this softness by running price promotions and discounted fares to stimulate double digit traffic growth. While average fares fell 1% (previously guidance having forecast flat pricing), this was offset by lower unit costs.
“The 4 new bases opened in 3Q16 (Berlin, Corfu, Gothenburg and Milan Malpensa) enjoyed strong advance bookings and are performing well,” O’Leary reported. “This winter we will deliver double digit traffic growth in Ireland, UK, Spain, Italy, Portugal, Poland, Germany and Denmark as we add 119 new routes to the network. Two new bases (Belfast and Ibiza) will open in March for summer 2016. We are finalising our winter 2016 schedule and will announce more new routes and destinations during February which will include our first Romanian base (Timisoara) which opens in November 2016.”
Moving onto the Always Getting Better (AGB) programme, O’Leary noted, “Our AGB programme and lower fares are driving strong forward bookings, higher load factors and accelerating traffic growth. We must again raise our full year traffic target to 106 million (from 105m previously guided). This represents a 17% increase on last year’s 90.6 million customers.
“Our relentless focus on costs saw unit costs fall by 5% in 3Q16. Fuel, which represents 40% of our cost base, was down 10% per passenger. 3Q16 ex-fuel unit costs fell by 1%, and are on track to fall by 2% for the full year, which is an impressive performance given our continued expansion into more expensive primary airports and the adverse impact of the EUR/GBP exchange rate movements,” O’Leary continued. “In the two years since we launched AGB, we have seen ex-fuel unit costs fall by over 2%. In January we concluded new five-year pay and conditions deals with all 76 pilot and cabin crew bases. These long term agreements, along with our low-cost aircraft deliveries, ongoing fuel savings, growth discount airport deals, low-cost bond financing and personalised marketing via our new website will ensure that Ryanair continues to lower its unit cost base while our competitors see their costs rise.”
The airline confirmed that its full year guidance that net profits will be towards the upper end of the €1,175 million to €1,225 million range (pre-exceptions). Ryanair added that it also cautions that this guidance is heavily dependent on the absence of further unforeseen events impacting close-in bookings and yields in 4Q16, especially over Easter, where the company is working to deliver 26% traffic growth.”