Ryanair profits up 26%, raises full year guidance on higher fares
05.11.07
Ryanair posted a 26 percent rise in second-quarter net profit today, as passenger numbers rose faster than it expected and sales were buoyed by charges for priority boarding and checked bags. The airline also raised its full-year profit guidance on the back of brighter than expected prospects for the winter.
Europe's biggest low-cost airline said its profit after tax in the three months to September 30 rose to €268.7 million (£186.5 million). Revenues in the period rose 25 percent on the year to €861.3 million. Its first-half profit rose 24 percent to €408 million on sales up 24 percent to €1.55 billion. Costs jumped 5 percent, mainly due to higher fuel, staff, and airport costs
Ancillary revenues increased 54 percent in the first half to €252 million and now account for about 16 percent of total sales, approaching the airline's 20 percent target. This income - from activities such as in-flight sales, boarding and baggage fees, airport parking, hotel bookings and travel insurance - is expected to be a major driver of future growth for the airline.
The Irish carrier, which has warned that business during the winter months will be tough, said it still expected ticket prices to drop in the six months to the end of March but that the fall in passenger yields (average fares) would be at the lower end of the 5 to 10 percent range previously indicated. It is trimming winter capacity to bolster margins.
Ryanair said in a statement: 'As a result of these better winter yield forecasts and the costs savings which we continue to realise, we now believe that full year net profit will rise by 17.5 percent to approximately €470 million.' This compares to a forecast of 10 percent in July.
Ryanair's CEO, Michael O'Leary, said: 'These record profits reflect a 20 percent growth in passenger volumes, a 1 percent decline in yields, and strong ancillary growth. However, our outlook for the remainder of the fiscal year remains cautious as we have very little visibility beyond the next two months.'
The airline said it would test a new in-flight mobile phone service on 25 aircraft before the end of March 2008, despite recent surveys saying passengers don't want the service. Ryanair now serves about 500 routes to 136 airports.
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