Ryanair lifts its profit forecasts after busy summer
Ryanair investors gleefully ignored Michael O'Leary's plea to avoid "irrational exuberance" yesterday, as shares in the airline were catapulted as much as 10% higher as it boosted its profit outlook for the current financial year.
In an unplanned trading update, Ryanair said it now expects to make profits of between €1.17bn (£0.85bn) and €1.22bn (£0.9bn) in the 12-month period that ends next March. That compares to a previously guided range of between €940m (£683m) and €970m (£705m), and marks a 25% leap.
The early morning share surge added over €1.6bn (£1.2bn) to Ryanair's market capitalisation - more than the market value of companies such as Greencore, Bulmer's maker C&C or Aer Lingus.
The spike gave Ryanair a market capitalisation of more than €18bn (£13bn) and closed the gap between it and Ireland's biggest company, CRH.
Ryanair said it had experienced stronger than expected peak summer traffic and prices, citing the success of its 'Always Getting Better' customer programme.
It said that traffic growth in the current third quarter that ends in December is expected to be 15% compared to a previously expected 13% rise.
Third-quarter fares are also now expected to be flat, compared to a previously expected decline of between 4% and 8%. Despite that, Mr O'Leary said he still expected Europe-wide air fare wars this winter.
Lower fuel prices for the unhedged portion of Ryanair's fuel bill will also help the airline. It has a fleet of over 315 Boeing 737 aircraft, and expects to have 520 by 2024.
But Mr O'Leary cautioned that some of the improvements in Ryanair's performance and its outlook were down to external factors beyond its control.
"We have clearly benefited from favourable industry trends this summer including bad weather in northern Europe, stronger sterling encouraging more UK families to holiday in the Med, reasonably flat capacity across the EU industry and lower prices for our unhedged oil," he said. "Being the airline industry we do not expect these favourable conditions will persist, and we would urge shareholders and analysts to avoid irrational exuberance."
The increase is Ryanair shares as it boosted its profit outlook for year