Dublin: Ryanair, Europe’s biggest budget airline, raised its full-year profit forecast after higher fares, a lower than expected fuel bill and a surge in demand after the Olympic Games helped it to beat first-half expectations.
The Ireland-based airline, which is waiting to hear whether EU regulators will approve its takeover of domestic peer Aer Lingus, said on Monday it was also benefiting from the collapse of European rivals like Spanair and Hungary’s Malev.
Many airlines have been hit hard by Europe’s struggling economy and high fuel costs. Ryanair has fared better than most, thanks to its size and focus on low costs and low prices.
“It was a strong performance after the Olympic Games, we certainly saw an upward rise in average fares. Many people who appeared to stay at home ... came back in force post the Olympic Games,” Chief Financial Officer Howard Millar told Reuters.
Ryanair said its fares rose 6 percent in the six months ended September, while passenger numbers surged 7 per cent.
As a result, it lifted its profit forecast for the year ending March 2013 to €490-520 million ($629-$668 million) from its previous guidance of €400-440 million.
“A very impressive set of results ... with a sizeable upgrade from the Q2 results. We expect Ryanair to outperform near term and recover some of the relative underperformance versus easyJet,” said Goodbody Stockbrokers analyst Donal O’Neill, referring to Ryanair’s British arch rival.
At 0845 GMT, Ryanair shares were up 7.3 per cent at €4.884s, the biggest rise by a European blue-chip stock.
Shares in European airlines Air France-KLM and Lufthansa both rose towards the end of last week after posting reassuring results on Thursday.
Ryanair said its first-half net profit rose to €596 millions from €544 million a year ago and ahead of analyst expectations at €564 million.
Revenue jumped 15 per cent to €3.1 billion.
The airline, with an average fare of €53, said it was cautious on winter trading due to low visibility on fourth-quarter bookings, but expected the positive trends in the first half to continue, with good forward bookings into the third quarter.
“We expect fares will rise for the full-year by about 4 per cent ... about 1 per cent higher than we expected, and our fuel bill will be down a bit more than we had previously guided,” said Millar.
Chief Executive Michael O’Leary told Reuters Insider TV that Spanish and Italian taxes had contributed to higher fares.
Ryanair’s fuel bill was lower than expected due to a fuel saving programme which manages the way pilots fly aircraft and where they buy fuel, said Millar.
The airline now expects its fuel bill to rise €260 million this financial year, €40 million s less than previously assumed, he added.
Ryanair has offered concessions to EU antitrust regulators in an effort to secure regulatory clearance for its proposed €700 million takeover of Aer Lingus.
The remedies include “at least two up-front buyer(s)” for routes that could be sold to ease competition fears, O’Leary said in a separate statement on Monday.
Ryanair, which carried 48 million passengers in the first half, said it was on target to grow its full-year traffic by 4 per cent. Over the next decade, it aims to grab an 18 per cent share of the European short-haul air travel market from its current 12 per cent.
(Reporting by Lorraine Turner; Editing by Richard Pullin and Mark Potter)