News Column

Ryanair's charm offensive sees profits soar 152%

July 29, 2014

By Rob Davies, Daily Mail, London

July 29--Ryanair's decision to be nice to its customers appeared to be bearing fruit, as first-quarter profits doubled at Europe's largest no-frills airline.

But the Irish carrier cautioned against any 'irrational exuberance', warning that performance in the second half will be hard to predict.

Ryanair turned over a new leaf last year, cutting penalty charges levied on passengers, introducing seat allocation and loosening restrictions on hand baggage.

The charm offensive helped the carrier deliver a 152pc increase in post-tax profits to pounds sterling 156m, on revenues that were 11pc higher at nearly pounds sterling 1.2bn.

Reductions in the fees it charges for baggage and other 'extras' were offset by income from charges for allocated seating, leading to a 4pc rise in non-ticket revenue.

Passenger traffic grew 4pc to 24.3m, while load factor the extent to which its planes were filled was up four percentage points to 86pc and the average fare was up 9pc.

Boss Michael O'Leary put this improvement down to an earlier launch of the group's summer schedule and a concerted effort to secure bookings further in advance. He pointed out that the strong results were flattered by the timing of Easter, which fell in the first quarter this year.

And the airline said it was facing some potential pitfalls during the rest of the year.

Ryanair said it expects lower prices in the second half, which it suggested was down to rivals cutting ticket prices to match its own fares. And the airline will increase capacity by 8pc over the winter to build a presence on business routes such as Dublin to Stansted, which it said would likely push prices down.

For the full year, Ryanair expects traffic to rise 5pc to 86m and raised full-year profit guidance, saying it could make up to pounds sterling 514m, compared to an earlier forecast of a maximum pounds sterling 491m.

But it warned that this prediction was uncertain because it does not yet know the impact that its capacity increases and price competition will have on profit margins in the second half.


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Source: Daily Mail (London, England)

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