DCSIMG

Ryanair profits soar 13%, but outlook clouded by recession

Passengers board a Ryanair flight. Picture: Getty/AFP

Passengers board a Ryanair flight. Picture: Getty/AFP

  • by GARETH MACKIE
 

Irish airline Ryanair has vowed to nearly double its market share within five years, but said the recession across much of Europe will dampen short-term growth.

The budget carrier, which recently had its third attempt to buy rival Aer Lingus blocked by the European Commission, expects “modest” traffic growth for the coming year, having seen passenger numbers rise 5 per cent to 79.3 million in the year to 31 March.

Chief executive Michael O’Leary said: “With almost zero yield visibility into the second half and the EU-wide recession, we expect that there will continue to be downward pressure on yields which will dampen full-year profit growth.”

However, he said the firm was confident that it could win a 20 per cent share of Europe’s short-haul market over the next five years as rivals cut capacity. Ryanair currently commands about 12 per cent of the market.

The Dublin-based airline posted a record annual post-tax profit of €569 million (£480m), up 13 per cent on the previous year and well ahead of the €542.7m pencilled in by broker Investec.

Revenues also grew 13 per cent, to €4.9 billion, boosted by a 20 per cent increase in so-called “ancillary” charges for service such as reserved seating. Ryanair said this had proved particularly popular with cost-conscious business travellers switching from other carriers.

Traffic is expected to grow by another two million passengers to 81.5 million in the current year, helped by this summer’s addition of more than 200 routes and seven new bases, including at Fez in Morocco and Maastricht in the Netherlands.

Capacity growth will slow to 3 per cent, from 5 per cent last year, as Ryanair waits for deliveries to begin on 175 Boeing jets it ordered in March, but O’Leary said this order gives the carrier an “enormous opportunity” to return to higher rates of growth.

He added: “The controlled delivery programme from autumn 2014 to end of 2018 will provide the opportunity to expand Ryanair’s fleet to over 400 aircraft and our traffic to over 100 million a year. I am confident that in time this new order will enable Ryanair to extend its traffic leadership over Europe’s airlines, and generate further returns for our shareholders.”

O’Leary described the decision by European regulators to thwart his efforts to acquire Aer Lingus as “bizarre”, given that he had found two upfront buyers to open competing bases at Cork and Dublin airports.

He added: “We have no doubt that this was yet another politically-motivated decision by Europe’s competition authority and it is inexplicable in the context of its stated policy of promoting European airline consolidation.”

The company had net cash of €61m at the end of the year, having returned almost €500m to shareholders in November through a special dividend.

Profits for 2014 are expected to rise to between €570m and €600m. Stephen Furlong, an analyst at Davy Stockbrokers, said: “It’s not unusual that the guidance is quite cautious, but they are still forecasting higher profits. Their cash generation remains spectacular.”

 

Comments

 
 

Back to the top of the page

 

EDINBURGH
FESTIVALS
2014

#WOWFEST

In partnership with

Complete coverage of the festivals. Guides. Reviews. Listings. Offers

Let's Go!

No Thanks