Conor Humphries Dublin
A sharp rise in earnings from add-on charges for items such as baggage and pre-assigned seating yesterday helped boost Ryanair’s earnings above expectations in the past year, lifting its shares to a record high.
Ryanair, which helped pioneer a business model in which low ticket prices are supplemented with charges for extras like printing boarding passes and carrying luggage, flew 5 percent more passengers last year, but earned 20 percent more on extras.
The company warned profit growth might slow sharply in the coming 12 months as it was waiting for new plane deliveries and margins were squeezed by higher fuel costs.
Yet, its cautious outlook was offset by a strong performance in the past year, buoyed by a 6 percent increase in average fares as capacity growth in Europe stalled, while non-ticket income from extras such as baggage and reserved seating was up by 20 percent.
That helped lift net profit 13 percent to a record e569 million (R6.7 billion) in the year through March, ahead of an average analyst forecast of 558 million in a company poll. A year ago Ryanair had forecast profit of between e400m and e440m.
Its shares rose more than 9 percent to a e6.90 peak.
Chief Executive Michael O’Leary said the result was a “testimony to the strength of Ryanair's ultra-low cost model”.
Key to the increase in so called “ancillary” charges was the roll-out of a scheme to allow the advance booking of specific seats across the network, allowing passengers to bypass the sometimes unruly rush to secure good seats on Ryanair flights.
Ryanair said the service had proved particularly popular with businesspeople trading down from Europe’s older national carriers, many of which are struggling to deal with high fuel prices and more cost-conscious travellers. Ryanair regularly raises the ire of customers and consumer groups by introducing charges for everything from printing boarding cards to booking flights on its web site.
The company had net cash of e61m at year end despite having paid almost e500m to shareholders in November. – Reuters