Ryanair today raised its full year profit guidance by 25% to as much as €1.25 billion following a better than expected summer but warned of a “sustained fares war” across Europe this winter.
The low-cost carrier cited stronger than expected peak summer traffic and fares which were “slightly higher than expected”.
Previous net profit guidance of €940 million to €970 million has been amended to a new range of €1.175 billion to €1.225 billion. This would be 40% ahead of last year’s figure.
The main drivers for the improved guidance include first half traffic growth of 13% against 10% originally projected and a 2% rise in fares.
Ryanair expects annual carryings to now hit 104 million against 103 million previously forecast.
But the airline cautioned that its full year result remains heavily dependent on close-in bookings in the third quarter of its financial year, with capacity currently 30% sold, and the fourth quarter.
“Ryanair continues to expect downward pressure on fares and yields this winter as it grows strongly in major EU markets such as Germany, at a time when competitors will begin to benefit from lower oil prices as historic hedges unwind,” the airline said.
Ryanair also confirmed that it has recovered all of the funds - less than $5 million - that were the subject of a fraudulent electronic transfer to a Chinese bank in April.
“As previously noted, steps have been put in place to ensure that such a transfer cannot recur,” the carrier added.
Chief executive Michael O'Leary said: "We have been surprised by the strength of close-in bookings and fares this summer during which we delivered record 95% load factors in both July and August while fares grew by over 2%, when we had expected them to be flat.
“During a year when Ryanair will grow traffic by more than 13 million customers per annum.
“It's clear that consumers all over Europe are delighted by and are switching to, our ‘Always Getting Better’ customer experience programme, our industry leading punctuality and our unbeatable low fares.”
He added: “We would caution that not all of this improvement is due to either our model or our management.
“As a ‘load factor active/yield passive’ airline we have clearly benefited from favourable industry trends this summer including bad weather in northern Europe, stronger sterling encouraging more UK families to holiday in the Med, reasonably flat capacity across the EU industry and lower prices for our unhedged oil.
“Being the airline industry we do not expect these favourable conditions will persist, and we would urge shareholders and analysts to avoid irrational exuberance while we continue to execute our very ambitious growth plans during what we expect to be very attritional and sustained fare wars across Europe this winter."
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