Reduced costs tipped to help Ryanair reach full-year profit targets

Ryanair is expected to hit full-year profit targets when it reports to the market this week having benefited from a higher-than-expected drop in unit costs.

Ryanair boss Michael OLeary is expected to announce pre-tax profits of £1.13bn as a result of a sharp drop in unit costs. Picture: Getty Images

The budget airline will release annual earnings on Tuesday, with consensus forecasts pointing to a pre-tax profit of about €1.32 billion (£1.13bn) for the 12 months to the end of March.

In February, Ryanair said it expected full-year unit costs, excluding fuel, to fall by 4 per cent compared with forecasts for a 3 per cent fall made after the first half of the financial year.

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Unit costs are defined as total operating costs for the company divided by the number of passengers.

Beaufort Securities said it was encouraged by Ryanair’s ability to offer lower fares while retaining net profit guidance.

“The key differences for Ryanair is its capability to continue lowering its unit costs, while delivering ‘lowest passenger costs’ amongst its EU peers, at the time of traffic growth and when competitors are forecasting flat or rising costs.

“This gap between Ryanair and its rivals will enable the group to maintain momentum and continue winning market share.”

However, in its third-quarter results released in February, Ryanair reported an 8 per cent drop in pre-tax profits to €95 million. It said average fares fell 17 per cent to €33 per passenger.