Ryanair lifts profit guidance after first quarter surge

Low-fares airline earned €197m after tax in first quarter up from €78m a year earlier

Good news for Ryanair shareholders as it boosts its annual profit guidance after booking a better-than-expected first quarter net income, up 152% to €197 million after tax. Video: Reuters

Ryanair boosted its annual profit guidance on Monday as rivals cuts theirs after the Irish airline booked a better-than-expected first quarter in which net income rose 152 per cent from a year earlier.

Europe’s biggest budget airline raised its forecast for full-year profit to between €620 million and €650 million in the year to March 2015, up from a range of €580 million to €620 million previously.

The rise comes in the wake of profit warnings by rivals Air France-KLM and Lufthansa and after Ryanair called an end to decades of famously austere service with the promotion of a new customer-friendly image from late last year.

"We've made a lot of service improvements over the last six or seven months and we're seeing the benefits in terms of rising profitability," Ryanair's chief financial officer Howard Millar said .

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Ryanair said strong forward bookings from a strategy aimed at tempting passengers to book their flights earlier increased its confidence for the year ahead and would see traffic grow by 3 per cent in the first half and fares increase by 6 percent subject to late bookings.

That followed a 9 per cent first-quarter rise in fares that helped Ryanair earn €197 million after tax, better than the €78 million it made a year earlier.

Ryanair, which said its first-quarter figures were somewhat distorted as Easter did not fall in the same period last year, expects a much softer pricing environment in the second half of its financial year as competitors cut fares, partly in response to Ryanair’s strong forward bookings.

It said it planned to aggressively raise capacity this winter by 8 per cent to take advantage of growth discounts and build out business-friendly routes.

Reuters