Ryanair Doubles Quarterly Profit, Plans €800 Million Buyback
Ryanair doubled fiscal third-quarter earnings as passenger numbers surged and said it will return €800 million to investors via a share-buyback program.
Profit after tax increased to €103 million in the three months ended 31 December from €49 million a year earlier, aided by a 25 per cent surge in passenger numbers to 20 million, Dublin-based Ryanair said today.
While the earnings figure was short of the €118.2 million anticipated by analysts, Europe’s biggest discount airline said traffic should jump 26 per cent in its final quarter, four points more than expected, allowing it to report a full-year profit at the upper end of a €1.17 billion to €1.22 billion range.
The buyback, to be made in light of “rising profitability and improving cash flow,” will commence on 5 February and span nine months, Ryanair said in a statement. Once the process is complete the carrier will have returned more than €4 billion to investors over the past eight year, it said.
Ryanair has grounded 10 fewer planes this winter than previously, while benefiting from a decline in jet fuel prices of almost 40 per cent over the past 12 months. Still, air fares weakened after the November terror attacks in Paris, and a one per cent decline in the third quarter is set to accelerate to six per cent in the current period, it said.
“We noticed a bit of softness post- those events, and as we always do when there is a bit of softness in the market, we stimulated it with fare promotions and discounts,” Chief Financial Officer Neil Sorahan said in an interview.
The fourth quarter will also see yields impacted by a weaker British pound, and earnings will be crimped by an Italian tax and an increase in non-fare ancillary revenue that will lag behind track growth, Ryanair said. The carrier’s full-year guidance is hence “heavily dependent on the absence of further unforeseen events,” especially over Easter, it said.
Ryanair has sought to refine its no-frills image by improving its website, offering more services to primary airports and providing paid-for extras to entice more business passengers and families.
The repositioning strategy, known as Always Getting Better, helped keep the proportion of seats filled above 90 per cent in the third quarter. Ryanair attracted 100 million passengers in calendar 2015 and said it aims to fly 106 million in the fiscal year, up 1 million from the previous target.
News by Bloomberg, edited by Hospitality Ireland