Ryanair shares soared yesterday amid a series of broker upgrades after the budget airline yet again revealed better than expected third-quarter results and raised its full-year profit forecast for the third time.
The company reported a 30 per cent increase in net profit to €47.7 million in the three months to the end of December, boosted by fare increases and higher ancillary income. Total revenue was up 33 per cent at €492.8 million.
For the full year to the end of March, Ryanair said it is expecting net profit of €390 million - a 29 per cent increase on the prior year. This compares with an earlier forecast for profit growth of 16 per cent.
Analysts welcomed the figures, which came in well ahead of forecasts and were positive on the outlook for the full year.
The shares jumped 76 cent, or 6.8 per cent, to close at €11.98.
Of particular interest was the outlook. Ryanair said it expects passenger volumes to increase by 25 per cent in the fourth quarter - this compares with a 19 per cent increase in the third quarter. It also said that yields will likely be in line with last year after initially forecasting a small decline.
In January it carried 3.1 million passengers - up 23 per cent on the same month last year. The load factor declined three points to 71 per cent.
While fuel costs will remain high, earnings in the fourth quarter will be positively impacted by the weakness in the spot oil price, which significantly reduces the cost of the 10 per cent of its fuel requirement that's not already hedged.
Finance director Howard Millar said the airline had taken advantage of the recent declines in the oil price and hedged 50 per cent of its fuel for the first half of fiscal 2008 and 90 per cent for the second half.
Currently 90 per cent of the group's fuel is hedged at $73 a barrel until the end of March.
Ryanair carried 10.3 million passengers, with a 7 per cent increase in yields, in the third quarter. Despite higher oil costs - 52 per cent ahead at €174.9 million - Ryanair maintained a net margin of 10 per cent.
In what is typically a more difficult quarter for airlines, Mr Millar said the Christmas period had been particularly busy and that the airline had benefited from a tendency amongst travellers to book their trips closer to the date of departure, resulting in higher fares.
The 7 per cent increase in average fares during the quarter was also boosted by the charge for checked-in baggage.
The airline estimates the luggage charge brings in about €2 per passenger.
Ancillary revenues increased 61 per cent, a gain attributed in part to excess baggage charges and higher on-board spending. The figure was also inflated by a one-off payment relating to the termination of a contract by its hotel-booking partner.
Ryanair also revealed that its planned two-for-one stock split, aimed at increasing liquidity, will take place on February 26th.
Mr Millar said the group will reconsider its lapsed bid for Aer Lingus once it hears from the European Commission, which is now investigating the proposed takeover, at the start of May.
