Ryanair profits soar but sees turbulence ahead

“Our bookings are strong but it’s very competitive,” says chief financial officer

A Ryanair Boeing 737 Boeing. The Irish carrier reported a surge in profits. Philippe Huguen / AFP
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Ryanair reported a 55 per cent gain in first-quarter profit as strong summer bookings swelled revenues, while cautioning that pricing will be “very competitive” through the remainder of its fiscal year as overcapacity crimps fares.

Net income jumped to €397 million (Dh1.69 billion) in the three months ended June 30 from €256m a year earlier, aided by a later Easter, Europe’s biggest low-cost airline said Monday. Analysts had been expecting a figure of €342m, on average.

Fiscal 2018 earnings will be in the region of €1.4bn to €1.45bn, in line with a previous forecast and up from €1.32bn euros a year earlier, Ryanair said. At the same time, fares that rose 1 per cent in the quarter are set to fall 5 per cent over the first half and 8 per cent in the second.

“Our bookings are strong but it’s very competitive,” said the chief financial officer Neil Sorahan. “With low fuel there are guys in the market who possibly shouldn’t be there. There’s been a lot of capacity that’s come into places like Spain and Portugal, the Middle East, Tunisia and Turkey.”

First-quarter revenue advanced 13 per cent to €1.91bn, supported by a 12 per cent jump in passenger numbers. Ryanair upgraded its full-year traffic target by 1 million customers to 131 million.

Ryanair has made an offer for bankrupt Alitalia, the highest-profile casualty of Europe’s capacity splurge and fare war, Mr Sorahan said. The Irish company has a “genuine interest” in the Italian flag carrier and the survival of its long-haul operations, having offered to provide passengers via a feeder agreement, he said.

Alitalia filed in May to be put under special administration for the second time in less than a decade, starting a process that will lead to the airline being overhauled, sold off or wound up.

"We put a non-binding bid in," Mr Sorahan said. "I can't say much more other than we think it is right to be involved in the process."

The chief executive Michael O'Leary in June said Ryanair would seek a majority stake in Alitalia if it decides to invest.

Alitalia accepted non-binding bids for its assets on Friday and also received proposals from carriers including easyJet, Deutsche Lufthansa and existing shareholder Etihad, according to the il Messaggero newspaper.

There’s a “strong likelihood” that Ryanair will convert 100 options for Boeing 737 Max jets into firm orders, possibly including the larger Max 10 version launched last month, although a decision is only due in the next year, Mr Sorahan said. The carrier ordered 10 additional Max 200s in June, for a total of 110, and has extended leases on 10 older 737-800s,

Bloomberg