Ryanair profits take off on rising fares

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No-frills airline Ryanair has shrugged off rising fuel costs to post a jump in profits as fares accelerated.

More than 17m passengers travelled with Ryanair in the three months to the end of December and the average fare rose by 8pc.

"The 8pc rise in average fares reflects our improved customer service, record punctuality and the successful roll out of our reserved seating service," said Michael O'Leary, Ryanair's chief executive.

That helped the Dublin-based airline post revenues of €968.8m (£828m), up from €844.4m in the same period the previous year.

Despite an €81m rise increase in fuel costs, pre-tax profits jumped 25pc to €19.3m during the traditionally weak final three months of the year.

"We saw strong demand out of the UK, out of Germany and out of Scandanavia and that has gone straight to our bottom line," Ryanair's chief operating officer Michael Cawley told Reuters .

"We are still struggling to understand it, to be honest."

While 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 prices and low costs.

Ryanair said it had benefitted from capacity cuts by rivals and that its new routes and bases were "performing well" in their first winter, albeit at very low prices at some smaller bases.

But Mr Cawley indicated that capacity will likely only grow by 2-3pc in the year to March 2014, compared to a 4pc rise forecast in the current financial year, due to the lack of new plane deliveries planned.

He added that average fares will grow at a slower pace in the three months to March.

The airline expects - as previously indicated - that traffic will drop by around 400,000 passengers in the final quarter due to the grounding of up to 80 aircraft, limiting the impact of high oil prices and seasonally weaker demand.

Nonetheless, it expects full-year profits to exceed its previous guidance and rise close to €540m.

Separately on Monday, Ryanair said European regulators should give the green light to Ryanair's €694m bid for rival Aer Lingus (Other OTC: AELGF - news) .

Flybe said last week that it would consider taking over some of the Aer Lingus routes where the operators have a duopoly, guaranteeing competition, if regulators sanctioned the deal.

"Ryanair has submitted a radical and unprecedented remedies package to the EU in support of its offer for Aer Lingus," said Mr O'Leary.