Ryanair predicts profits boost thanks to wet summer and strong pound
Ryanair became the latest airline to thank the wet summer weather and strong pound for helping profits take off as it upped its outlook for the full year.
The Iri sh no frills airline said holidaymakers booking last-minute deals to escape the dismal end to the summer helped its passenger numbers jump 13% in the first half of its financial year and is expecting a 15% hike in the third quarter.
It is now pencilling in annual profits of between 1.18 billion euro to 1.23 billion euro for the year to the end of March - a sharp rise on the 867 million euro it posted the year before and a 25% increase on its previous forecast.
The recent poor weather spurred many to jet off to beach destinations, while people in Britain have also been travelling abroad to take advantage of the strong pound.
Last week, fellow budget carrier easyJet also increased its profit guidance after notching up record passenger numbers in July and August.
Airlines have been helped further by cheaper fuel costs as the price of oil has tumbled in recent months.
Ryanair chief executive Michael O'Leary said: "We have been surprised by the strength of close-in (late) bookings and fares this summer."
"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 added.
But he cautioned shareholders against "irrational exuberance" after the profits guidance hike, stressing the recent boost enjoyed by the airline industry is not expected to continue.
Shares in the airline soared 8% after the profits cheer.
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: "The good news from the low cost airline sector continues.
"A rejuvenated customer offering has proved central, with the poor weather in Northern Europe and the strength in the pound also playing its part," he added.
But Ryanair, which is celebrating its 30th anniversary, added that its full-year results depend heavily on late bookings for the next six months, while it also expects to see competition drive air fares.
The group was able to increase its air fares by 2% over the first half, although Mr O'Leary said it was facing "sustained fare wars" across Europe this winter.
As well as an exodus abroad among UK holidaymakers this summer, Ryanair has also been benefiting from a customer service overhaul.
Under its Always Getting Better programme, Ryanair has rolled out a raft of initiatives to win over fliers, including allocated seating, new seats with more leg room, 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, as well as a redesigned website, app and booking features such as Hold The Fare under a second year of its customer programme.
Ryanair received another fillip recently, revealing in its latest update that it has successfully recovered millions of pounds of funds that were fraudulently transferred electronically to a Chinese bank account in April.
It said the funds were less than five million euro, adding that it has put in place steps to combat future fraudulent transfers.