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Image revamp boosts Ryanair profits

Published 26/05/2015

Ryanair saw profits growth take off last year as a revamp sent earnings soaring
Ryanair saw profits growth take off last year as a revamp sent earnings soaring

Budget airline Ryanair saw profits growth take off last year as a revamp designed to improve its image and attract business customers sent earnings soaring by 66%.

The Irish no-frills c arrier - which is celebrating its 30th anniversary - posted post-tax profits of 867 million euro for the year to the end of March, up from 523 million euro the previous year.

It has bounced back from a drop in annual profits in the previous financial year - its first for five years - thanks to a major push to improve its customer service as part of a programme called Always Getting Better, as well as an expanded business schedule.

Passenger traffic leapt 11% to 90.6 million customers over the year to March 31.

Ryanair chief executive Michael O'Leary said the customer services programme had attracted "millions of new customers".

He added: "Our AGB (Always Getting Better) programme is transforming our customer experience, our service, and the way we listen and respond to our customers.

"We have won substantial traffic and share gains in all markets."

The group had increased its guidance for the full-year figures five times ahead of the results and predicted post-tax profits of between 940 million euro and 970 million euro for the year to next March.

But the group cautioned that it could face tough competition amid an industry-wide move to slash prices, which could impact its business over the winter season.

It said: "It would be foolish not to expect some irrational pricing response from competitors who cannot compete with our lowest costs and fares."

Falling oil prices have also provided a boost, with the group reporting an 11% fuel saving per passenger.

And the group said revenues rose 12% to 5.65 billion euro over the year to March.

Ryanair also gave a cheery outlook for the summer season as it said forward bookings were 4% ahead of a year earlier, while its average load factor - how well it is filling its planes - grew by 10% over the first four months of the year.

But this growth in load factor will slow to 1% or 2% over the peak summer months, it said.

Ryanair has rolled out a raft of initiatives to win over fliers, including allocated seating, new seats with more legroom, improved in-flight meals, extra carry-on luggage and more business-friendly schedules.

It is also promising new aircraft interiors and updated uniforms for cabin crew, with other plans under a second year of its customer programme.

The group is also leasing six aircraft over the summer period to meet growing demand from fliers and boost its 320-strong fleet of planes.

Shares leapt more than 4% after the results.

Ryanair said plans are in place to support growth, with an order for 183 new planes for delivery until 2018 and up to 200 aircraft due between 2019 to 2023.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said Ryanair's charm offensive was paying off.

He said: "The group's softer customer approach appears to be reaping rewards.

"Market share gains are being made, forward bookings are ahead of last year, while new aircraft orders have been made in order to help underpin future growth."

Ryanair also said in its results that it remained open to considering an offer from British Airways owner International Airlines Group (IAG) for its stake in rival carrier Aer Lingus "if or when it is received".

IAG's indicative approach for Aer Lingus was rejected by the Irish Government, which owns a 25% stake in the carrier, in February.

Talks are continuing, but IAG has said it will not go ahead with a full bid unless it gets backing from the Irish Government and Ryanair, which owns a 29.8% stake in Aer Lingus.

Ryanair has been ordered to cut its holding in Aer Lingus by UK competition authorities, but called the ruling "erroneous" in today's full-year results report.

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