Ryanair raises profit forecast despite higher costs

Budget airline Ryanair has increased its full-year profit forecast after its average fares rose faster than expected during the third quarter.

The Irish carrier said it expects to deliver a profit of up to €540 million (£461.6m) for the year to March, up from an earlier estimate of between €490m and €520m, although it predicted that fuel costs will rise by 19 per cent.

The improved forecast came as the airline, headed by chief executive Michael O’Leary, posted a profit after tax of €18.1m for the three months to 31 December, up from €14.9m a year earlier, on revenues 15 per cent higher at €969m.

Average fares during the period rose 8 per cent, ahead of the 3 per cent rise predicted by analysts, and passenger numbers grew 3 per cent to 17.3 million.

O’Leary also said today that Ryanair had submitted a “radical and unprecedented” package of remedies to the European Union in a bid to win regulatory approval for its bid for Aer Lingus.

He said: “The remedies involve two upfront buyers each basing aircraft in Ireland to take over and operate a substantial part of Aer Lingus’ existing route network and short-haul business.

“This will be the first EU airline merger which will deliver structural divestitures and multiple upfront buyers. We look forward to completing our offer for Aer Lingus subject to receiving approval from the EU competition authorities in early March.”

Meanwhile, rival EasyJet confirmed this morning that chairman Sir Michael Rake is to stand down in the summer after three years in the post.

Rake survived an attempt by EasyJet founder Sir Stelios Haji-Ioannou last year to have him ousted from the board, and said it had been a “tremendous experience” to chair the budget carrier.

He added: “EasyJet has by any definition enjoyed a period of success and profitable growth in the last three years. As this takes the airline to the threshold of entry to the FTSE 100, it is the right time for me to stand down.”