Ryanair Launches Share Buyback as Profit More Than Doubles
01 February 2016 - 6:20PM
Dow Jones News
LONDON—Ryanair Holdings PLC on Monday announced a new €800
million ($867 million) share-repurchase program and said
third-quarter net profit more than doubled despite sales weakness
the airline suffered in the wake of the terror attacks in Paris
last year.
Net profit was €102.7 million, compared with €48.9 million in
the prior year, the Dublin-based budget airline said. Sales for
Europe's largest discount carrier rose 17% to €1.33 billion in the
three months ended in December, it said.
EasyJet PLC, Europe's No. 2 budget airline, last week said sales
retreated after terror attacks in Paris and Egypt triggered a
temporary bookings slump. Ryanair said the Paris attacks in
November that killed 130 people and a subsequent security shutdown
in Brussels led average fares in the period to decline 1%, having
earlier projected them to be flat. Lower costs helped compensate
for the negative development.
"I think it has worked its way out of the system," Neil Sorahan,
the airline's chief financial officer said of the Paris impact.
The share-buyback program is due to start Feb. 5, Ryanair said,
and is likely to run about nine months. It is the airline's single
biggest share buyback program, Mr. Sorahan said in an interview,
adding that the carrier will have returned in excess of €4 billion
to shareholders over the past eight years.
Ryanair has undertaken a string of share buybacks or paid
special dividends in recent years to reward investors. Last year it
distributed €398 million in special shares to investors after
selling its stake in Aer Lingus to International Consolidated
Airlines Group SA.
The discount carrier also lifted its fourth-quarter passenger
traffic forecast to 26% growth for the three-months period ending
in March, up from a projected 22% increase. It now expects to
transport 106 million passengers in the current financial year.
Even so, Ryanair stuck to its full-year earnings guidance that
net profit should be toward the upper end of its €1.175
billion-to-€1.225 billion range.
The airline's long-term growth projections last year were
already lifted to carrying 180 million passengers a year in the
2024 fiscal year, 20 million passengers more than it had previously
forecast.
The carrier also said it had taken advantage of low fuel costs
to start locking in prices into future years using financial
instruments. Ryanair has now secured fuel prices for about 95% of
next year's expected consumption at a cost that should deliver
around €430 million in year-over-year savings.
Fuel hedges also are now in place for about 50% of consumption
in the subsequent year, promising a further cut in the airline's
fuel bill. Fuel prices at such levels could yield another €300
million in lower costs, Mr. Sorahan said.
The savings would be used to lower ticket prices as Ryanair
continues a period of capacity expansion, it said. Ryanair expects
the airfare environment to get more competitive as other Europe
carriers also see fuel higher-price fuel hedges replaced with lower
terms.
"We see pressure on pricing in the next number of months," Mr.
Sorahan said.
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
February 01, 2016 02:05 ET (07:05 GMT)
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