Budget airline Ryanair (RYA) has delivered an 11% rise in pre-tax profit, driven by more traffic throughout Easter and cheaper fares.
This offset Ryanair having to cancel thousands of flights after failing to properly plan holiday leave for its pilots. This lead to a shortage of essential crew, and a backlash from passengers.
In the half year to 30 September, pre-tax profit increased 11% to €1,293m and ancillary sales were up 14% to €1,012.2m thanks to higher traffic and uptake of reserved seating and priority boarding.
Average fares remained an issue, falling 5% to approximately €47. Ryanair believes fares will fall by 4% to 6% in the year to 31 March 2018, down from a slightly higher range of 5% to 7%.
WAGE COSTS SET TO RISE TO €100m
Davy Research’s Stephen Furlong says Ryanair’s rostering failure is ‘not without cost’, highlighting €25m in non-recurring costs and €45m for higher crew wages, which will rise to €100m in a full year.
He forecasts earnings will be broadly flat in the year to March 2019 as fuel headwinds weigh on performance, but is confident the airline will endure thanks to cheaper fares and ancillary sales growth.
Canaccord Genuity’s Rob Byde is cautious as Ryanair slashed its full year traffic target to 129m, down from 131m due to planned winter grounding of aircraft and the fallout from recent disruption.
Full year guidance was unchanged at a range of €1.4bn to €1.45bn, although this remains dependent on second half bookings and could be hit by ‘negative Brexit developments.’
