Ryanair Lifts FY Profit Guidance 25% On Strong Summer Traffic, Prices; Stock Up

(RTTNews) - Irish airline Ryanair (RYA.L, RYAAY) Wednesday raised its full- year net profit guidance by 25 percent, citing stronger than expected peak summer traffic and prices, as its Always Getting Better customer experience program won new customers at slightly higher than estimated air fares. The stock soared over 9 percent in early trade.

The company now expects net profit for the year in the range of 1.175 billion euros to 1.225 billion euros, compared to the previous expectation of 940 million euros to 970 million euros.

The main drivers for this improved guidance are first-half traffic growth of 13 percent, which was previously guided to be 10 percent, and fares up over 2 percent, which was earlier expected to be flat.

Third-quarter traffic growth is now expected to be 15 percent, compared to the prior projection of 13 percent. Fares for the quarter are now expected to be flat, as against -4 to -8 percent expected earlier.

Full-year 2016 traffic forecast is now increased to 104 million, from the previous expectation of 103 million.

Yet, Ryanair cautioned that its full-year result remains heavily dependent on close-in bookings in the third and fourth quarters.

The company continues to expect downward pressure on fares and yields this winter as it grows strongly in major EU markets like Germany. At this time, competitors will begin to benefit from lower oil prices as historic hedges unwind.

Ryanair also confirmed that it has successfully recovered all funds that were the subject of a fraudulent electronic transfer to a Chinese bank in April.

Ryanair's CEO Michael O'Leary said, "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." The stock climbed 9.4 percent in early trade to 14.15 pence.