What do you get when you combine a wet summer at home, cheap oil and cuddly customer service? A very happy Irish budget airline. Pre-tax profits at Ryanair rose 37% to €1.2bn (£885m) for the six months to September 30 – and that’s not even counting the €317m it netted from selling its Aer Lingus stake to IAG in July.
Revenues were up 14% to €4bn as the strong pound and wet summer in northern Europe helped produce record passenger numbers of 58.1 million over the six month period, up 13% on the year before.
O’Leary added that ‘millions of customers switched to Ryanair for our Always Getting Better customer experience programme’, though how far cuddly customer service (including more leg room, a healthier in-flight menu and new cabin crew uniforms) is responsible remains a matter of debate.
Crucially, Ryanair was able to convert this passenger boost into a four percentage point increase in its load factor (i.e. how full the planes are), to 93%. When combined with cheap oil reducing overall fuel costs 1% despite an increase in flight numbers, this resulted in unit costs falling 6% - hence the bumper profits.
O’Leary said all this would translate to ticket prices falling by 4% early next year, which might be why the firm raised projected passenger numbers for the full year to 105 million – and 180 million by 2020. ‘We are going to trash everyone on fares,’ was how he put it recently.
Though the firm acknowledged it has ‘almost zero visibility’ on passenger bookings in its fourth quarter, it raised its full-year profit forecast to the higher end of its €1,175m-€1,225m range. Predicting the future may indeed be impossible, but the fact that Ryanair’s extended its fuel hedges to cover 95% of its requirements in 2017 at $62 makes clear skies likely for the foreseeable future – unless of course oil drops even lower ($20 a barrel, anyone?). Expecting the good news, investors sent Ryanair shares up 0.5% to 13.56p.