It's nice to be important but it's more important to be nice. This is perhaps the main takeaway from Ryanair's (RYA) half year results which reveal a 32% increase in net profit to €795 million. Full year guidance has also been raised again and Ryanair expects net profit for its full-year 2014-15 to come in at between €750 million and €770 million.

Investors certainly like today's news, shares in the Dublin-based budget airline surging 9.2% to €8.29.

Weak prior year comparables and Easter falling in the first quarter are contributing factors to the group's strong first half performance. Yet the airline's 'Always Getting Better' strategy, unveiled in September 2013, also seems to be paying-off, improving the customer experience that had hitherto been an industry benchmark in unhelpful rudeness.

Higher load factor and higher average fairs are attributable in large part to the improved website and the fact that Ryanair has worked to give customers a friendlier boarding and in-flight experience. Revenues are up 9% to €3.25 billion as a consequence.


Going forward, Ryanair is increasing its winter capacity roll out and now expects traffic to grow by 12% in the third quarter (having previously estimated a 7% rise) and by 20% in the final quarter from a previously forecast of a 10% increase). Having been the butt of frequent jokes regarding the often remote locations of its destination airports, Ryanair has also latterly taken to targetting its expansion to the more primary airports in a territory. Orders for new aircraft – such as the $11 billion order for 100 Boeing 737 Max in September – should significantly lower unit costs and underpin growth targets.

Weakness in oil prices have also played into low-cost carrier's hands and Ryanair has upped its fuel hedges to 90% for full year 2016, at approximately $93 per barrel. In Euro terms, this should result in a 2% reduction in unit fuel costs in 2016.

Davy Research continues to 'rate Ryanair ‘Outperform’ as it incrementally takes profitable market share and generates positive free cash flow.'

Issue Date: 03 Nov 2014