Ryanair Posts 4% Profit Rise, Sticks With Forecasts
25 July 2016 - 3:40PM
Dow Jones News
LONDON—Ryanair Holdings PLC stuck to its earnings target for the
year after first-quarter profit rose 4%, bucking a trend for
European carriers.
Ryanair on Monday posted a €256 million ($281 million) net
profit for the April-June period, up from €245 million a year
earlier. Sales were up 2% to €1.687 billion.
Still, Europe's largest airline by passenger numbers said its
earnings outlook for full-year profit in the range of €1.375
billion to €1.425 billion bears risk. It now expects to carry 117
million passengers in the financial year ending March 31, up 1
million from its initial projection.
"We caution that post Brexit there are significant risks to the
downside during the remainder of the year," the carrier said.
Airline earnings have been hit by a sequence of shocks in recent
months. Terrorist attacks, repeated air-traffic-control strikes,
and the U.K.'s vote to leave the European Union have dented
consumer confidence and slowed bookings. Airlines have had to offer
steep discounts to fill planes.
British Airways parent International Consolidated Airlines Group
SA cut its forecast for profit growth immediately after the Brexit
vote. British budget airline easyJet PLC followed with a profit
warning and, last week, said this month's terrorist attack in Nice
and failed coup in Turkey could cause another demand slump.
Deutsche Lufthansa AG on Wednesday said profit would fall this
year, rather than rise slightly as previously forecast. The German
carrier said terrorist incidents had led to a sharp fall in
long-haul bookings.
Ryanair Chief Executive Michael O'Leary said "ongoing market
volatility" weakened fares on last-minute flights.
Winter is expected to be particular difficult for European
airlines, as they slash fares to try to win customers leery about
traveling. Ryanair, which stuck to its projection that fares in
that slow-travel period could fall 10% to 12%, said "if there is
any movement in these numbers it is likely to be toward the
downside."
Share prices of Europe's airlines have nose dived this year,
Ryanair down 27%, rival easyJet more than 40% and IAG 34%. Ryanair
used the slump to accelerate a previously announced share-buyback
program in June. The airline on Wednesday is seeking shareholder
approval for another repurchase program of as much as 10% of its
stock should the price swoon provide buying opportunities.
Mr. O'Leary lobbied hard for the U.K. to remain in the EU. The
airline called the outcome "both a surprise and a disappointment."
Since the Brexit vote, he said, the airline would deploy new planes
due for delivery elsewhere.
Ryanair said it would cut available seats on routes from its
busy London Stansted hub this winter, though without closing any
routes. It forecasts that uncertainty from Brexit will keep at
least the pound low and economic growth depressed in the U.K. and
Europe through at least the end of next year.
If Britain's ties to the European single-aviation market are
severed, it could jeopardize the few all-domestic U.K. routes
Ryanair operates, the budget airline said, and also hurt British
shareholders. It said such a severing could also provide
opportunities, though, as British rivals may be forced to retrench
from some intra-EU markets.
Ryanair said it is making contingency plans. EasyJet has said it
plans to seek a EU operating license, in addition to its British
and Swiss ones, to preserve traffic rights if those are in jeopardy
from post-Brexit trade agreements.
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
July 25, 2016 01:25 ET (05:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Ryanair (NASDAQ:RYAAY)
Historical Stock Chart
From Apr 2024 to May 2024
Ryanair (NASDAQ:RYAAY)
Historical Stock Chart
From May 2023 to May 2024