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Ryanair Fare Concern Takes Shine Off 25% Quarterly Earnings Gain

Published on Jul 27 2015 12:34 PM in General Industry tagged: Featured Post / Ryanair / Trending Post

Ryanair Fare Concern Takes Shine Off 25% Quarterly Earnings Gain

Ryanair Holdings said fiscal first-quarter earnings advanced 25 per cent and that full-year numbers should be toward the top end of its forecasts, while cautioning that over-capacity could weigh on average fares.

Net income rose to €245.1 million in the three months through June from €196.8 million a year earlier, Dublin-based Ryanair said Monday. Fares should be stable through the summer but may dip later in the year.

Earnings for the whole of fiscal 2016 are likely to be at the higher end of a previously forecast €940 million euros to €970 million euros range, according to a statement.

Ryanair said it will curb plane groundings this winter as it seeks to tempt passengers from network airlines such as Deutsche Lufthansa AG, with new routes in Germany, Sweden and Israel due later in 2015.

“It’s been a good summer, bookings are strong,” Chief Financial Officer Neil Sorahan said in an interview. “We’ve got a slightly better first half but we’re fairly cautious into winter. We’ve got very limited visibility on our bookings.”

Shares of Ryanair were trading down 3.2 per cent at €11.93 as of 8:13 am. They’ve gained 27 per cent this year, valuing the company at almost €16 billion.

 

Earnings were in line with the €245.5 million predicted by analysts. Sorahan said forward reservations for the first half through September are about four per cent up on last year, though bookings for the third and fourth quarters stand at only 10 per cent and 2 per cent respectively.

Ryanair, whose planes flew 92 per cent occupied in the first quarter, said it will remain focused on pricing tickets to fill flights rather than maintain yields. A fare slide that reached 4 per cent in the first quarter, while flattening out in the summer, is likely to take hold again in the winter as capacity grows and rivals seek to hang on to market share.

Chief Executive Officer Michael O’Leary has sought to broaden Ryanair’s customer appeal by toning down his sales pitch and offering a range of paid-for extras to entice more business passengers and families. The carrier will role out a new website in October.

Ryanair boosted passenger numbers 16 per cent to 28 million people in the first quarter and increased its traffic target for full-year 2016 by 3 million people to 103 million.

News by Bloomberg, edited by Hospitality Ireland

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