Ryanair share price soars 4% as Michael O'Leary's 'be nice' strategy takes off

Letting people choose their seats is paying off: the budget airline's first quarter profit jumped 152%.

by Rachel Savage
Last Updated: 03 Nov 2014

It’s been a good week for Ryanair. On Thursday, bitter budget rival EasyJet’s profit forecast disappointed the ever-tetchy markets. Today, it raised its own full-year forecast as it reported first quarter profits had soared 152% to €197m (£156m), which unsurprisingly pleased investors no end.

Revenues for the quarter to June 30 surged 11% to €1.5bn, with average fares up 9% and passenger numbers climbing 4% to 24.3m. That meant the airline could raise its full-year profit forecast from €580m-€620m to €620m-€650m, after it surprised the markets with two profit warnings just last autumn.

It looks like chief exec Michael O’Leary’s semi-successful pledge to do a bit less talking (he has been known to call customers ‘stupid’ and once told MT going on holiday is a ‘waste of time’) and copying EasyJet’s strategy of being slightly nicer to customers (for example, allocating seating rather than rubbing his hands gleefully over pre-boarding scrums) is paying off.

He did ‘strongly caution’, in uncharacteristically snore-some CEO speak, ‘both analysts and investors against any irrational exuberance’, pointing out the timing of Easter had made profits look particularly good. Ryanair also expects competitors to slash fares, while it said raising its capacity 8% over the winter, as the first of 180 new Boeing planes make their appearance, will also push down ticket prices.

It’s too soon, then, to say O’Leary has successfully beaten back EasyJet’s challenge. But investors weren’t too worried about any turbulence later this year: shares were up more than 4% in mid-morning trading.

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