Business

Ryanair sets sights on rapid growth

Ryanair plane Image copyright Getty Images

Ryanair expects to have 180 million passengers a year within a decade as its growth plans gain momentum.

That is 20 million higher than the Irish airline's previous target. For 2015, it forecasts 105 million.

The revised figure comes as Ryanair posted a 37% rise in half-yearly pre-tax profit to €1.23bn (£879m), excluding exceptional items.

Passenger numbers rose 13% to 58.1 million and revenue jumped 14% to just over €4bn.

The results covered the six months to 30 September.

The company also said that profits for 2015 would be at the upper end of the €1.175m to €1,225m range, but would depend on bookings for the last three months of the year.

The load factor - a measure of how full each flight was - rose by four percentage points to 93% and Ryanair became the first EU airline to carry more than 10 million passengers in a month in July.

Michael O'Leary, chief executive, said: "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."

He said there could be a price war next year and expected fares would fall by 4% in the first three months.

"We are already reducing our prices... and in recent weeks we have seen most airlines reduce their prices."

'Positive' response

Ryanair has taken steps in recent months to improve its customer service and the travelling experience for passengers.

The airline said that early customer response to a new personalised website had been "very positive".

It raised the traffic target for 2015 by one million to 105 million - 16% higher than last year's total - and said capacity would rise sharply in major markets such as Denmark, Germany, Italy, Poland, Spain and the UK next year.

In comparison, British Airways carried 77.3 million passengers in 2014.

Ryanair's market share in Lufthansa-dominated Germany is just 5%, but the Irish airline aims to take that to 20%, carrying 40 million passengers annually, by 2020.

"We are going to trash everyone on fares," Mr O'Leary said last month.

Image copyright Getty Images
Image caption Ryanair chief executive Michael O'Leary said there could be an airline price war next year

Ryanair expects to save about €430m in 2017 after agreeing to buy 95% of its fuel at $62 a barrel.

The new Boeing 737-800 aircraft it is adding to the fleet will cost less in euro terms than most of its existing planes, the company said.

"This combination of lower aircraft and fuel costs will enable Ryanair to continue to lower fares and grow market share."

Shareholders will get the €398m from the recent sale of Ryanair's stake in Aer Lingus to IAG,

Ryanair shares closed 3.5% higher at €13.96 and have risen by three quarters over the past 12 months.

That jump is considerably higher than the 16% rise enjoyed by shareholders in arch-rival easyJet, and the 42% rise for investors in British Airways owner IAG.

'Exceptional performance'

Shares in easyJet fell 2.2% on Monday after a downgrade by analysts at HSBC, with a target price £2 lower at £16.

Aviation analyst Stephen Furlong, at Dublin-based stockbrokers Davy, described Ryanair's results as an "exceptional performance".

Keith Bowman, equity analyst at Hargreaves Lansdown, said the airline's ascent showed few signs of slowing.

"New bases and routes continue to be undertaken, the group's stranglehold on costs is now the template rivals aspire to, while the group remains in a key position to lead future industry consolidation," he said.

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