Ryanair profits jump as softer image pulls in flyers

Michael O'Leary: 'Programme is transforming our service'. Picture: PA
Michael O'Leary: 'Programme is transforming our service'. Picture: PA
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Ryanair’s profits took off last year as the budget airline’s high-profile charm offensive aimed at improving its image and attracting business customers pushed earnings up two-thirds.

Michael O’Leary’s Irish carrier, celebrating its 30th anniversary, posted post-tax profits of €867 million (£614m) for the year to end-March. Revenues this time lifted 12 per cent to €5.65 billion.

The latest profits compared with €523m in the previous 12 months, which marked the group’s first profits fall in five years.

In response, O’Leary launched a customer service programme called Always Getting Better (AGB), as well as an expanded business schedule.

Among Ryanair initiatives were allocated seating, new seats with more legroom, improved in-flight meals, extra carry-on luggage and more business-friendly schedules.

O’Leary said yesterday that the initiative attracted “millions” of new customers, boosting passenger traffic 11 per cent to 90.6 million customers in the latest financial year.

“Our AGB programme is transforming our customer experience, our service, and the way we listen and respond to our customers. We have won substantial traffic and share gains in all markets,” the chief executive said. The airline had increased its guidance annual full-year earnings five times, and yesterday guided towards post-tax profits of between €940m and €970m for the current year.

Despite the upbeat statement, Ryanair warned that it could not rule out some “irrational pricing” from rival low-cost airlines in a highly competitive aviation environment that might hit its business over the winter season.

By contrast, Ryanair said the latest results were boosted by the slump in the price of oil last year, which translated into an 11 per cent fuel saving per passenger.

Ryanair said the outlook was good for the summer season, with forward bookings 4 per cent up. Its average load factor – how full its planes are and a key metric for the industry – rose 10 per cent over the first four months of the year.

Ryanair said growth would be underpinned by an order for 183 new planes for delivery between now and 2018 and up to 200 aircraft between 2019 to 2023.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: “The group’s softer customer approach appears to be reaping rewards.”

Another analyst said: “These are good numbers, it’s pretty positive.”

Meanwhile, Ryanair said yesterday that it remained open to considering an offer from British Airways owner International Airlines Group (IAG) for its stake in rival carrier Aer Lingus “if or when it is received”.

IAG’s indicative approach for Aer Lingus was rejected by the Irish government, which owns a 25 per cent stake in the carrier, in February.

Talks are continuing, but IAG has said it will not go ahead with a full bid unless it gets backing from the Irish government and Ryanair, the latter holding a 29.8 per cent stake in Aer Lingus.

Ryanair has been ordered to cut its holding in Aer Lingus by UK competition authorities, but called the ruling “erroneous”.