Ryanair shares soared to an all-time high yesterday after the airline hiked its annual profit forecast by 25 per cent on strong summer fare growth, helped by bad weather in northern Europe and retrenchment by rivals.
The Irish carrier, Europe’s largest by passenger numbers, said it now expects net profit of between €1.18 billion and €1.23 billion in the 12 months through March 2016, up from an earlier forecast of €940 million to €970 million.
Ryanair credited part of the growth to the success of its two-year old drive to improve customer service.
But it said poor weather in northern European markets, lower oil prices, the strength of sterling and a lack of new capacity on European short-haul services were key factors.
“The softer approach to customer care appears to be paying dividends,” chief executive Michael O’Leary said in a video statement. “But I would credit more of this to there being generally benign industry factors across Europe this summer.”
O’Leary also pointed to unexpectedly strong late demand for flights as helping push up prices. Average fares in the six months to end-September were up two per cent on a year ago, bettering the company’s forecast that they would be flat, and impressive given Ryanair expanded capacity by 13 per cent at the time.
Ryanair shares hit an all time high of €14.27 in early trade, up 10 per cent, while its main rival Easyjet was up 2.6 per cent, having already signalled an improved outlook.
Easyjet last week raised its annual profit forecast to between £675 million (€928 million) and £700 million after record demand for beach holidays and city breaks.
Lufthansa, which Ryanair is targeting with a major expansion in Germany, also said last week it had experienced its strongest summer ever, with business substantially better in July and August than expected.
Ryanair said it still expected sustained fare wars across Europe this winter, but added that fares in the three months to the end of December would be flat, withdrawing an earlier forecast that they would fall by between four and eight percent.
Fares will still drop by an average of two to four percent in the three months to March, traditionally the weakest of the year, as Ryanair boosts capacity by 20 per cent.
Ryanair filled 95 per cent of its seats in July and August and said it expected to fill an average of 91 per cent across its financial year, up from an earlier forecast of 90 per cent.