Ryanair raises forecast and unveils buy-back plan

Michael OLeary said new customers were being drawn to Ryanair. Picture: Greg Macvean

The Irish carrier, which is aiming to improve its image in a effort to win more business travellers, said it now expects to deliver an annual profit of between €840m and €850m, up from its previous €810m-€830m guidance, but it also warned of “modest” growth next year.

The upgrade came as Ryanair, led by chief executive Michael O’Leary, reported a net profit of €49m for the third quarter ending 31 December, compared with a loss of €35m for the same period a year earlier.

O’Leary said: “These strong results confirm that our ‘always getting better’ customer programme and expanded business schedule, coupled with our substantial fare and cost advantage over competitor airlines, is drawing millions of new customers to Ryanair.”

As well as sharing a special dividend of €520m at the end of this month, investors are to be rewarded for the airline’s growth through a €400m share buy-back programme that will run until August.

O’Leary said low oil prices would help Ryanair shave costs in the current quarter. Traffic is expected to grow by 25 per cent, with average fares falling 6 per cent to 8 per cent as price cuts are used to expand its network and boost business schedules.

However, the airline said some of its competitors would be “significant beneficiaries” from the lower oil price as they bought less fuel in advance, and said investors and analysts should be “mindful of this likely increased price competition”.

Rival EasyJet last estimated that the halving in the cost of a barrel of crude oil since last summer would take between £90m and £130m off its annual fuel bill, taking an average of £2m off passengers’ fares collectively.

Ryanair said yesterday: “Ryanair intends to pass on much, if not all, of these [oil price] savings to our rapidly growing customer base in the form of lower fares and therefore our profit growth will be modest in 2016.”

Meanwhile, the Dublin-based firm said it had received no formal approach over its near-30 per cent stake in Aer Lingus, following the announcement of a proposed takeover of the airline by British Airways owner International Airlines Group (IAG).

Ryanair reiterated that the board would “carefully consider any such offer, should one be received, from IAG or any other party, in due course”.

Ryanair’s third-quarter results came as Etihad Airways, which is due to start services between Edinburgh and Abu Dhabi in June, announced it carried almost 14.8 million passengers last year, a surge of 23 per cent compared with 2013.

Chief executive James Hogan said: “We enter 2015 as a stronger, more dynamic airline.”