Ryanair reports full year net profit of €523m

Dino D'Amore
By Dino D'Amore May 19, 2014 13:47

Ryanair reports full year net profit of €523m

Ryanair has reported a full year net profit of €523m, slightly ahead of previous guidance.  Traffic grew 3% to 81.7m passengers.  Revenue per passenger was flat, as strong ancillary revenue growth offset a 4% fall in average fares.  Excluding fuel, sector length adjusted unit costs fell by 3%.

Ryanair’s, Michael O’Leary, said: “While disappointing that profits fell 8% to €523m due mainly to a 4% decline in fares, weaker sterling, and higher fuel costs, we reacted quickly to this weaker environment last September by lowering fares and improving our customer experience which caused H2 traffic to grow 4% as load factors rose 1%.  Ancillary revenues grew 17%, much faster than traffic growth, and now accounts for 25% of total revenues.”

During the past financial year, Ryanair launched 121 new routes and established eight new bases in Athens, Thessaloniki, Brussels, Lisbon, Rome (FCO), Catania, Lamezia & Palermo. Ryanair stated that the four new bases at Athens, Brussels, Lisbon and Rome are “performing ahead of expectation as customers switch from high fare carriers to Ryanair”.  The budget carrier also ordered 180 new for delivery from 2014 to 2018.

O’Leary commented that forward bookings for Summer 14 are “significantly ahead of last year, since we began offering lower fares and released our seasonal schedules earlier, and this should continue to deliver 2% higher load factors, and help us manage fares closer to departure as we have less capacity to sell”.

In its report, Ryanair is keen to point out that it has worked hard to improve customer experience and “enhance our industry leading service” with: allocated seating; a simpler website with a “fare finder” facility; including a free small second carry-on bag; the launch of “quiet flights”; a 24 hour “grace period” to correct minor booking errors; reduced boarding card and airport bag fees; and a new service to cater for groups and corporate travellers.  The carrier will launch a new family product in June to allow children (when travelling with their family) to receive discounts on allocated seats and bags, while families who travel frequently with Ryanair can qualify for discounts on future flights.

Also later this year Ryanair is launching a business service that will include, same day flight changes, bigger bag allowances, premium seat allocation, mobile boarding pass, and fast-rack through security at many airports.  “This service, together with our new GDS distribution strategy, will make Ryanair much more accessible and easier to use for business customers,” says O’Leary.

Ryanair is 90% hedged for FY15 at a cost of $960 per tonne (approx. $96 p.bl), which will generate net savings of approx. €70m compared to FY14.  In light of recent oil price and US$ weakness, Ryanair states that it has hedged approx. 13% of its FY16 fuel (at approx. $94 per barrel), and have also hedged its dollar requirements which will deliver further savings of up to 4% per passenger, in Euro terms, in FY 2016.

During the past financial year, Ryanair was rated BBB+ by both S&P and Fitch that makes it the highest rated airline in the world.  During FY14 the carrier also completed €482m of share buybacks, well ahead of its original €400m target.  “We remain committed to returning a further €500m to shareholders in Q4 via a special dividend subject to AGM approval.”

Ryanair expects FY15 traffic to grow by 4% to over 84.6m as load factors increase 2% to 85% and it adds some limited new route and capacity growth.  Most of this growth will be skewed towards H2 as Ryanair reduces its winter grounding from 70 aircraft in FY14 to approx. 50 in FY15.

While fares fell by 4% in FY14, O’Leary expects FY15 fares to rise by up to 2%. He added however that “we remain very cautious about H2 guidance (especially following last winter’s weak price environment) where we are committed to 6% capacity growth which could cause H2 fares to fall by as much as 6% to 8%”.

Dino D'Amore
By Dino D'Amore May 19, 2014 13:47
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