RYANAIR’S SHARE price closed just over 5 per cent higher in Dublin yesterday, closing at €3.52, as the airline upgraded its full-year profit guidance by 10 per cent.
Ryanair now expects to post a net profit of €440 million for the year to March 31st, 2012. It previously expected to achieve a surplus of €400 million.
This is the result of better than expected yields in the first half of the year and an expectation that yields in the second half will rise to 14 per cent, rather than the 12 per cent previously forecast.
This profit performance will come in spite of an expected 4 per cent decline in passenger numbers in the second half of the year.
Ryanair has decided to ground 80 aircraft over the quieter winter period because of high fuel costs. These cuts will primarily affect Dublin and Stansted airports, where passenger charges have increased sharply in recent years.
Ryanair reported a 12 per cent increase to 44.7 million in passenger traffic for the six months to the end of September.
Its revenues increased by 24 per cent to €2.7 billion while adjusted profit after tax was 20 per cent higher at €543.5 million.
On a conference call to analysts, chief executive Michael O’Leary described the results as “very strong”.
The figures showed that Ryanair’s average fare (including its baggage fee) rose by 13 per cent in the period to €50. This compares with €71 at EasyJet and €96 at Aer Lingus.
Mr O’Leary said the rise in fares was due to a slower rate of growth, a better mix of new routes and bases and rising competitor fares.
Ancillary sales rose by 15 per cent to €487 million while unit costs increased by 13 per cent. The rise in costs was due to an increase in flight times and a 37 per cent rise in fuel costs.
“Excluding fuel, sector length adjusted unit costs were flat,” Mr O’Leary said.
This was in spite of a 2 per cent pay rise, higher Eurocontrol fees and “substantially” higher charges at Dublin airport, he added.
Ryanair has hedged 90 per cent of its fuel in the current financial year at $82 a barrel. For full year 2013, it has extended its hedging to 90 per cent for the first half at $99 a barrel and 50 per cent for the second half at $98 a barrel.
At a press briefing in Dublin, deputy chief executive Michael Cawley said that to “stand still” next year, the airline would have to increase fares by €3 a passenger to cover the increase in its fuel costs.
“It’s a constant battle with the price of fuel,” he added.
Ryanair almost halved its net debt in the first half to €372 million. Mr O’Leary indicated that this figure would be reduced to about €200 million by the year end.
Cash balances rose to €3.1 billion. Mr O’Leary said that in the absence of a deal to buy new aircraft, it would continue to build cash reserves with a view to a dividend payment of €500 million in full year 2013.
He said there was also a possibility of further share buybacks. “Our aim is to drive the share price up and not to be dribbling out dividends to shareholders,” he added.