Ryanair Continues Strong Financial Performance with 32% Rise In Half Year Profits

Ryanair has announced an H1 Net Profit increase of 32% to €795m.  Traffic grew by 4% to 51.3 million passengers, average air fares increased by 5% and total revenues rose by 9% to €3,537 million.  Unit costs also fell by 2% (excluding fuel which rose by 3%).  The airline’s load factors in H1 jumped by 4% to 89%, which the airline attributes to a stronger Easter holiday season and the success of its “Always Getting Better” customer experience improvements as part of the airline’s image turn-around.

H1 Results (IFRS) 

Sep 30, 2013

Sep 30, 2014

% Change

Passengers(m)

       49.2m

        51.3m

 +4%

Revenue(m)

    €3,255m

     €3,537m

 +9%

Profit after Tax(m)

       €602m

        €795m

+32%

Basic EPS(€ cent)

        42.04

         57.44

+36%

 

Michael O’Leary, the airline’s CEO, said of the financial performance in H1:  

“We are pleased to report this significant increase in H1 profits.  While partially due to the presence of Easter in Q1 and a weak prior year comparable, we have also enjoyed a strong summer thanks to our strategy (announced Sept. 2013), of raising forward bookings and improving our customer experience which has delivered higher load factors and yields.”

O’Leary also pointed out a series of milestones the airline accomplished in this period, including:

  • H1 profits up 32% to €795m.
  • Traffic up 4% to 51.3m (load factor up 4% points to 89%).
  • Average H1 fare up 5% to €54.
  • 4 new bases and 57 new routes opened.
  • Improved website and mobile app rolled out.
  • “Always Getting Better” customer experience improving.
  • “Family Extra” and “Business Plus” products launched.
  • €850m 7yr Euro bond issued @ 1.875%.
  • €520m special dividend in Feb 2015 approved.
  • Launch order for 200 Boeing 737-MAX “Gamechanger” aircraft (sub. to EGM approval).
  • Revised growth plan to double to 150m p.a. customers by 2024.

“Our customers are finding it easier to locate and book our lowest fares on our improved website,” O’Leary said, “while our new responsive mobile app has been downloaded more than 3m times in just 6 months.  The customer experience is also improving at every touch point from mobile booking, online check-in, a smoother boarding process, and a friendlier on-board service where customers are really enjoying allocated seating and using their PED’s.”

O’Leary expressed satisfaction with the progress of the airline’s image turn-around strategy saying of the “Always Getting Better”

“We have been pleasantly surprised at the rapid uptake of our new Family Extra and Business Plus products which are enabling Ryanair to win new customers from all our higher fare competitors.  We expect the uptake of our “Business Plus” service to build during our winter schedule which offers many more business routes to\from primary airports.  Price conscious and time sensitive business passengers are already switching to Ryanair for our industry leading punctuality, and the better travel experience which our ‘Business Plus’ product delivers.”

Included in the airline’s announcement and the comments from the CEO, was a commitment to focus on continued improvements in the digital realm.

“The success of our improved website and mobile app has been validated by the significant surge in web visits across all major markets particularly the UK. This time last year Ryanair was just 3rd in the UK for airline website visits (running behind both British Airways and Easyjet) on the Hitwise website listings.  In the last 6 months we have overtaken both of these higher fare competitors to become the UK’s number one airline website, and the gap between us and these higher fare competitors is widening.  Our newly established Ryanair Labs development team will roll out more innovative services and features on our website and mobile app on a continuous basis into 2015.”

The announcement also addressed the matter of fluctuating fuel prices, and Ryanair took the opportunity to highlight its effective market hedging which takes advantage of lower prices now available.

“We have taken advantage of recent oil price weakness to extend our fuel hedges to 90% for FY16, at approx. $93 per barrel.  In Euro terms this will result in a 2% reduction in unit fuel costs over the next 12 months.  We will now look for opportunities to extend our fuel hedging programme into FY17 to lock in future cost savings.  We have also extended our Capex programme to September 2017 at an average exchange rate of €/$1.35 which locks in substantially lower costs for the new aircraft deliveries.”

Moving forward, Ryanair expects to capitalise on these gains by raising winter capacity and overall traffic growth objectives.

“Traffic will grow by 12% in Q3 and by 20% in Q4, which are very ambitious targets during the weaker half of the year.  However, we believe it is time to capitalise upon the many opportunities available to us at both primary and secondary airports, to grow our route network and increase frequencies, in order to attract business traffic which tends to travel more during the winter period.

“As a result traffic in H2 will now rise by 16% or 5.3m customers (2.2m more than previously guided) although we still expect H2 fares to fall. With reasonable visibility in Q3 we expect traffic will grow 12%, while ave. fares will fall between -3% to -5% (slightly better than our previous -6% to -8% guidance).  In Q4, we plan to grow traffic by 20%, and expect fares will fall by -6% to -10%, (as we use lower fares to achieve our significantly higher traffic targets).  Accordingly, we now expect full year traffic will grow by 9% to 89m customers, and ave. fares for FY15 to rise by just 1% to €47.  Unit costs (excluding fuel) will be positively impacted by this significant H2 traffic increase, and we now expect unit costs will be flat for FY15.  Including fuel, unit costs will fall 4% in FY15.

“As a result of these 2.2m additional H2 passengers and falling unit costs, our full year net profit will significantly exceed our previous guidance (of €650m) to a new range of between €750m to €770m.  However, we caution that this raised guidance remains heavily reliant on the strength of close in bookings for the remainder of Q3, and in particular Q4 where we presently have very little visibility.”

Featured Image: Ryanair Aircraft/Ryanair

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