Ryanair raises profit forecast after healthy holiday season

By Padraic Halpin

DUBLIN (Reuters) - Ryanair raised its full-year profit forecast on Friday after a better-than-expected performance over Christmas and New Year, lifting shares in other airlines as analysts said the outlook boded well for the sector.

Europe's largest low-cost operator expects a profit of between 950 million and 1.05 billion euros ($1.17 billion) for its financial year to the end of March, versus the 800 to 900 million euro range it forecast in November.

Ryanair's shares were 6.7% higher at 0845 GMT, with fellow budget carriers Easyjet and Wizz Air rising 3.4% and 4.4% in its slipstream. Shares in British Airways-owner IAG were also up 4.5%.

Better-than-expected forward bookings for January to April come just a month after Ryanair had to cut its summer capacity as a result of further delays in returning Boeing's grounded 737 Max aircraft to service.

The Irish carrier said on Friday that on current trading, it expected to finish close to the mid-point of its new profit range and the 1.02 billion euros posted in its last financial year, the airline's weakest annual profit in four years.

Ryanair said forward bookings for January to April were running 1% ahead of this time last year, which would mean slightly better-than-expected average fourth quarter fares.

Full-year passenger numbers would rise to 154 million from the previously estimated 153 million as a result, it added.

MAX FACTOR

Ryanair last month cut its traffic forecast for the year to March 31, 2021 to 156 million from 157 million after scrapping some planned summer operations due to delivery delays to the MAX jets on order from Boeing.

That forecast was based on Ryanair receiving 10 MAX aircraft in time for the summer season. It previously cut expectations to 20 from the 60 originally scheduled and chief executive Michael O'Leary has since said it may need to wait until October for the first MAX plane.

Friday's trading update did not mention the 2021 passenger forecast.

Analysts at Bernstein said Ryanair could be the first signal of a recovery in airline sector profits.

"EU airlines, and especially short haul carriers, should make hay while the sun shines. With the Max still grounded and capacity growth at lower levels, this may indicate a better yield environment through winter," Bernstein said in a note.

Ryanair also said that Austrian subsidiary Laudamotion continued to underperform, with average fares over Christmas lower than expected, despite strong traffic growth and high load factors.

Laudamotion's net loss for the full year would therefore widen from under 80 million euros to around 90 million euros.

($1 = 0.9012 euros)

(Additional reporting Muvija M in Bengaluru; Editing by Arun Koyyur, Alex Richardson and Alexander Smith)