RYANAIR Q1 PROFIT UP 25% TO 245M,
HIGHER LOADS AS TRAFFIC GROWS 16% TO 28M
Ryanair, Europes No. 1 low fares airline, today (27 July) reported a Q1 profit of 245m,
up 25% on last year, as traffic grew 16% to 28m due to stronger load factors, up 6% points
to 92%.
Q1 (IFRS)
Customers (m)
Revenue (m)
Profit after Tax (m)
Net Margin
Basic EPS ( cent)
30 June, 2014
24.3
1,496
197
13%
14.22
30 June, 2015
28.0
1,653
245
15%
17.90
% Change
+16%
+10%
+25%
+2pts
+26%
Ryanairs Michael OLeary said:
We are pleased to report strong growth in traffic and profits in Q1. Our mix of low fares,
best on time performance (91% in Q1) and enhanced customer experience under our
Always Getting Better (AGB) programme, continues to attract millions of new
customers. At the same time our focus on cost (Q1 unit costs fell 7%) enables us to pass
on lower fares to customers. Q1 average fare fell 4% to just 45, due to the timing of
Easter, weaker April yields and lower checked bag penetration as more families and
business customers enjoy discounts on their luggage or benefit from our free 2nd carry-on
bag policy.
New Routes and Bases:
We continue to be inundated with growth offers from primary and secondary airports,
whose incumbent carriers are cutting capacity and traffic. These new airports, along with
our 72 existing bases offer significant growth opportunities as we embark on our new B737800 programme. This winter we take delivery of 31 aircraft which (net of lease returns),
means our fleet will increase to 340 B737-800s by year end.
In September we open our 6th German base in Berlin where we have a 5% share of the
German market and expect to grow this strongly over the next 5 years. Gothenburg (our
2nd Swedish base) will also open in September. In November, Israel will become our 31st
country served when we start flights to Eilat Ovda Airport from Budapest, Kaunas and
Krakow.
Two weeks ago we decided, in the best interests of our customers and people, to close
our 2 Danish bases in Copenhagen and Billund. This followed threats by the Danish Unions
who admitted that they had no members among our Copenhagen pilots or cabin crew to
get their members (competitor airline employees) to blockade/disrupt our flights. By
moving the aircraft from Copenhagen and Billund to airports outside Denmark the unions
have no legal basis for imposing these threatened disruptions, which allows us to continue
to grow strongly in Copenhagen without union interference.
Customer Experience:
The year 2 rollout of AGB continues apace as we work to improve the travel experience
of our millions of customers. In April we cut fees for sports equipment. In May we
upgraded our mobile app to include improvements to the My Ryanair customer
registration function which facilitates faster and easier booking of our low fares. We
added Sabre as our 3rd GDS partner in June and in July we celebrated our 30th birthday
with a 1m 19.85 seat sale.
We have also enhanced our Groups travel service with a dedicated groups page on
www.ryanair.com. Ryanair joined Facebook in July, which provides another channel to
communicate with, and listen to our customers. Ryanairs campaign to Keep Greece
Flying, under which we dropped prices on Greek domestic routes to just 4.99 one way
while also cutting fares on international routes to/from Greece by 30% has been well
received. Our on time performance leads the industry, and has further improved in Q1
despite the impact of the French ATC strikes, and the closure of T3 in Rome Fiumicino.
Ave
for
Year
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
FY15
91%
89%
87%
86%
90%
90%
92%
91%
84%
85%
91%
92%
89%
FY16
90%
92%
91%
91%
There is a lot more AGB development to come later this year, including a new personalised
web site in October, new aircraft interiors, new crew uniforms and new bases.
Hedging:
Fuel is 90% hedged for FY16 at approx. $91 pbl and we have taken advantage of recent
lower oil prices to increase our FY17 fuel hedging to 70% at an ave. rate of just under $66
pbl. This will deliver significant fuel bill savings in FY17 of up to 250m (based on current
hedging). Our advantageous US$ CapEx hedging, along with our low cost eurobond
financing, will help us to continue to purchase and operate aircraft at very low costs which
further widens the cost advantage that Ryanair enjoys over all other EU airline
competitors.
Balance Sheet:
Ryanairs balance sheet remains one of the strongest in the industry. In Q1, despite CapEx
of 324m and share buybacks of 195m, our net cash increased to over 550m (from 364m
in March). We have completed almost 90% of our current 400m share buyback programme
which when it closes in August, will mean we have returned almost 3bn to our
shareholders via special dividends and share buybacks since 2008.
IAG - Aer Lingus:
On 10 July, the Board of Ryanair voted unanimously to accept the IAG offer for Ryanairs
29.8% stake in Aer Lingus. The timing of this sale is appropriate as our original plan for
Aer Lingus (to use it as a mid-priced brand to offer competition at primary airports) has
been overtaken by our AGB programme under which Ryanair has successfully entered many
of Europes primary airports opening new routes and bases but offering competition and
consumer choice. As the Ryanair brand develops and continues to grow strongly, the
original rationale for acquiring Aer Lingus no longer exists. If the IAG offer is successful,
then we would expect to receive these proceeds in mid/late September and the Board
will consider our use of the proceeds around the time of our AGM.
We will continue to oppose the UK CMAs baseless 2013 divestment ruling, (and their
recent rejection of Ryanairs request to review that decision), which was based on the
invented theory that no other airline would bid for Aer Lingus while Ryanair was a minority
shareholder. This has been hopelessly exposed by IAGs current offer for Aer Lingus, even
while Ryanair was its largest single shareholder.
Outlook:
Due to the exciting growth opportunities that exist for Ryanairs low fares and AGB
customer experience, as well as strong customer demand, we expanded our W15 business
schedules which will increase our FY16 traffic target from 100m to 103m. This will be
achieved through a combination of strong load factor (90%) and fewer winter groundings
(approx. 40). Traffic should increase by 13% in H1 and slightly faster at 15% in H2.
Based on this Q1 performance and reasonable visibility into Q2 (which is heavily dependent
on late bookings in Aug and Sept) we now believe that ave. fares for H1 will be broadly
flat (previous guidance 0% to -2%). We have very little visibility into H2, during which we
expect that our faster capacity growth (up 15%) and lower oil prices may lead to an
aggressive pricing response from competitors who will try to defend their market shares.
We therefore remain very cautious about weaker prices and yields this winter. Since
Ryanairs policy is to be load factor active/yield passive we expect that H2 fares will be
towards the higher end of our -4% to 8% guidance range.
Our focus on unit cost continues and we expect that unit costs will fall by approx. 3%
(aided by higher traffic). Fuel will deliver a saving of close to 7% and unit costs ex-fuel
will be broadly flat. Ancillary revenue will be well ahead of our long term target of 20%
of total revenue but will track behind the 14% growth in customer numbers in FY16.
We think it is too early in the year to alter our full year profit guidance, although the
slightly better H1 yields will push it towards the upper end of our previously guided range
of 940m to 970m net profit. We caution however that this guidance, which is 12% ahead
of last years profit, is heavily reliant on the final outturn of H2 fares over which we
currently have almost zero visibility. Ryanair will continue to pursue its strategy of being
load factor active and yield passive for the benefit of our customers, our people and our
shareholders.
ENDS.
For further information
please contact:
www.ryanair.com
Neil Sorahan
Ryanair Holdings plc
Tel: 353-1-9451212
Joe Carmody
Edelman
Tel: 353-1-6789333
Certain of the information included in this release is forward looking and is subject to
important risks and uncertainties that could cause actual results to differ materially.
It is not reasonably possible to itemise all of the many factors and specific events that
could affect the outlook and results of an airline operating in the European economy.
Among the factors that are subject to change and could significantly impact Ryanairs
expected results are the airline pricing environment, fuel costs, competition from new
and existing carriers, market prices for the replacement aircraft, costs associated with
environmental, safety and security measures, actions of the Irish, U.K., European
Union (EU) and other governments and their respective regulatory agencies,
weather related disruptions, fluctuations in currency exchange rates and interest
rates, airport access and charges, labour relations, the economic environment of the
airline industry, the general economic environment in Ireland, the UK and Continental
Europe, the general willingness of passengers to travel and other economics, social
and political factors.
Ryanair is Europes favourite airline, operating more than 1,600 daily flights from 72
bases, connecting 191 destinations in 31 countries and operating a fleet of more than 300
new Boeing 737-800 aircraft. Ryanair has recently announced firm orders for a further 283
new Boeing 737 aircraft, as well as options for 100 more Boeing 737 MAX 200s, which will
enable Ryanair to lower fares and grow traffic from 103m this year to 160m p.a. in 2024.
Ryanair currently has a team of more than 9,500 highly skilled aviation professionals, and
has an industry leading 30-year safety record.
