Ryanair to drive air fares down as half-year profit rises 37%

Europe’s largest budget airlines this morning posted that first-half net profit rose by 37% to €1.09 billion after a strong summer and low fuel prices. Ryanair wants to bring air fares down over the winter.

The budget airline – once famed for off-hand treatment of passengers – dramatically changed its image. Being pleasant to customers has paid off. The Dublin-based airline said the load factor for the first half of the financial year jumped 4% points to 93%. As traffic grew by 13% to 58 million passengers, the earnings for the full year should be at the top of the airline’s projections.

We have enjoyed a bumper summer due to a very rare confluence of favourable events including stronger sterling, adverse weather in northern Europe, reasonably flat industry capacity and further savings on our unhedged fuel, chief executive Michael O’Leary said.

This winter Ryanair will open 4 new bases (Berlin, Corfu, Gothenburg and Milan) and 119 new routes including a 4 daily Dublin – Amsterdam route, a 6 daily Cologne – Berlin service, and 3 routes to Eilat Ovda (Israel) from Budapest, Kaunas and Krakow. The carrier plans a busy winter season flying almost all planes that don’t have to undergo scheduled maintenance. The airline takes delivery of 28 new Boeing 737 aircraft which will take the fleet to 340 by year end, with another 330 on order. These aircraft will deliver with Boeing’s new Sky interiors and slimline seats which will improve leg room.

Mr O’Leary claims that Ryanair plans a decline in pricing to put pressures on its competitors.

Winter pricing will tend to be softer only because we’re expanding in so many markets across Europe. We’re forecasting flat in Q3 up to Christmas and then down 4% in our fourth quarter (from January to March).

The budget airline is expecting to carry 105 million passengers this year, one million more than forecast in September. It now predicts that third quarter traffic will grow by 17 per cent and by 22 per cent in the fourth quarter.