Ryanair Lifts Forecast After Higher Profit
By Tracy Allay, Shanghai Daily | Feb. 06, 2007
Ryanair Holdings Plc, Europe's biggest discount carrier, raised its full-year earnings forecast after third-quarter profit unexpectedly increased 30 percent on higher fares and baggage charges, it said on Feb. 5.
Net income rose to 47.7 million euros (US$61.7 million), or 6.12 cents a share, for the three months ended on December 31 from 36.8 million euros, or 4.76 cents, a year earlier, the company said in a statement, according to Bloomberg News. The figure was more than double the 21-million-euro median estimate of nine analysts surveyed by Bloomberg.
The Dublin-based airline's stock rose the most in two years after CEO Michael O'Leary predicted a 25 percent increase in passengers in the current quarter and full-year profit of 390 million euros compared with an earlier forecast of 350 million euros. The introduction of baggage fees in March last year helped offset higher third-quarter fuel costs.
"Ryanair always surprises and they've surprised again," said Howard Wheeldon, an analyst at BGC Partners LP. "People seem to have adapted to the baggage charge and more of them are taking advantage of the ability to use an airplane like a bus."
O'Leary said in the statement that "this exceptional 30 percent increase in third-quarter profits during a period of higher oil prices, intense competition, and 21 percent seat capacity growth demonstrates, yet again, the robustness of Ryanair's lowest fare model."
The airline, based on the low-cost model pioneered by Southwest Airlines Co in the United States, flew 10.25 million passengers in the quarter, up 19 percent from a year earlier. Revenue jumped 33 percent to 493 million euros.
The load factor, or proportion of seats filled, averaged 82 percent in the period compared with 84 percent a year earlier.