Ryanair raised its profit forecast for the second time in a month yesterday following a 22 per cent jump in passenger numbers in November as new high-frequency routes to mainstream European airports proved popular.
Since a pledge last year by outspoken Chief Executive Michael O’Leary to stop “unnecessarily pissing people off,” Ryanair has also shifted its focus to business travellers while cutting use of small regional airports.
Ryanair said that despite increasing its seat capacity by 13 per cent in the month and opening a large number of new routes aimed at business customers, it increased its load factor, an indication of the number of seats sold as a percentage of capacity, by seven per centage points to 88 per cent.
That performance was described as “phenomenal” by Davy Stockbrokers.
Goodbody analyst Mark Simpson said the higher load factor could “provide surprises to the upside” on operating margins in the coming months.
Ryanair’s operating margin was 16.4 per cent over the last 12 months compared to a four per cent industry average, according to ThomsonReuters data.
Ryanair expects to make a profit of between €810 million and €830 million for the year ending next March, having last month increased the after-tax profit forecast by almost 20 per cent to €750-770 million.
Shares in the firm, Europe’s largest low-cost carrier, were up 7.8 per cent at €9.4 by 1036 GMT, and up about 60 per cent in the past 12 months.
Ryanair said better customer service and a drive to sell more tickets earlier helped its performance while its industry-leading cost base means it can undercut rivals.
Ryanair’s largest low-cost rival, easyJet yesterday reported passenger numbers up three per cent in November, while smaller Irish rival Aer Lingus said short-haul passengers were down nine per cent.
Ryanair highlighted the success of new three-times daily routes from Dublin to Brussels and from London to Glasgow and Edinburgh, both of which are aimed at business passengers.
New twice-daily internal flights in Poland to compete with LOT and three-times daily flights from Lisbon to London to take on TAP were also singled out.
The focus on service by Ryanair and budget rival easyJet has increased the pressure on higher cost “full-service” airlines like Air France-KLM and Lufthansa.
The German airline’s board approved plans on Wednesday to expand its budget flight operations.
Ryanair has said it does not expect significant upside in profitability from the recent fall in the oil price as it is hedged for 90 per cent of its fuel to March 2016.