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Dublin - Ryanair reported its first fall in profits in five years on Monday on intense competition in European short-haul, but said higher average ticket prices this summer would help lift profits by up to 20% in the coming year.
The Irish airline earned $717m after tax in the year ended March 31, a fall of 8% on the previous year.
But Ryanair's share price rose 5.5% as it forecast its profit in the current year year could climb to €620m and the fall last year was slightly better than feared when the airline gave its second profit warning of the year in November.
Rivals last year said Ryanair's first profit warnings in a decade were the result of it being forced to cut ticket prices after losing business to competitors seen as being more friendly to customers.
In response Chief Executive Michael O'Leary in September reversed decades of famously austere service, adding seat allocations, easing restrictions on hand luggage and cutting penalty charges such as for failing to print out online boarding passes.
"While disappointing that profits fell 8% ... we reacted quickly to this weaker environment last September by lowering fares and improving our customer experience," O'Leary said in a statement.
"We expect this combination of a strong first half but a weaker second half will generate a significant rise in after-tax profits", he said.
Shares up
Ryanair shares were up 6.4% at €6.75 by 11:37, although that was still 14% below their all-time high of €7.82 hit before last year's profit warning.
While the after-tax profit of €523m was behind last year's €569m, it was ahead of guidance given late last year of €500m to €520m.
It was also ahead of an average forecast of €515m given in a company poll of more than 20 analysts.
O'Leary said profits in the current year should be between €580m and €620m, an increase of between 11% and 19%.
That was below the average of €634m given in the Ryanair poll but many analysts see Ryanair as being routinely cautious in forecasting future profits.
"Their guidance is conservative. But I think the market will take that guidance as dependent on (fare) yields falling in the winter and they say they have zero visibility," said Stephen Furlong, an analyst with Davy Stockbrokers in Dublin.
Ryanair expects to see average fares increase 6% in the key summer months compared to the same period a year earlier.
Rival easyJet last week forecast growth in revenue per seat yields "in the low single digits" for the same period.
Ryanair's average fares will fall by between 6% and 8% in the six months to March as the first of 180 new Boeing jets are delivered, Millar said.
The airline expects passenger numbers to increase 4% to €84.6m in the current year, consolidating its position as Europe's largest airline by passenger numbers.
