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London - Ryanair reported a 55% gain in first-quarter profit as strong summer bookings swelled revenues, while cautioning that pricing will be “very competitive” through the remainder of its fiscal year as overcapacity crimps fares.
Net income jumped to €397m in the three months ended June 30 from €256m a year earlier, aided by a later Easter, Europe’s biggest low-cost airline said on Monday. Analysts had been expecting a figure of €342m, on average.
Fiscal 2018 earnings will be in the region of €1.4bn to €1.45bn, in line with a previous forecast and up from €1.32bn a year earlier, Ryanair said. At the same time, fares that rose 1% in the quarter are set to fall 5% over the first half and 8% in the second.
“Our bookings are strong but it’s very competitive,” chief financial officer Neil Sorahan said in a phone interview. “With low fuel there are guys in the market who possibly shouldn’t be there. There’s been a lot of capacity that’s come into places like Spain and Portugal, the Middle East, Tunisia and Turkey.”
Ryanair shares fell as much as 3.6% and were trading 3.4% lower at €17.44 as of 09:06, where the company is based. The stock has gained 21% this year, valuing the business at €21bn.
First-quarter revenue advanced 13% to €1.91bn, supported by a 12% jump in passenger numbers. Ryanair upgraded its full-year traffic target by 1 million customers to 131 million.
Alitalia proposal
EasyJet, Europe’s No. 2 discount carrier, fell almost 6% on Thursday after cautioning that fares are set to drop into next year even as a strong summer helps earnings. Ryanair had already warned that low oil prices would continue to support capacity growth and drag down per-seat revenue, saying in May that fares would drop by 5% to 7% during fiscal 2018.
Ryanair has made an offer for bankrupt Alitalia, the highest-profile casualty of Europe’s capacity splurge and fare war, Sorahan told Bloomberg Television. The Irish company has a “genuine interest” in the Italian flag carrier and the survival of its long-haul operations, having offered to provide passengers via a feeder agreement, he said.
Alitalia accepted non-binding bids for its assets on Friday and also received proposals from carriers including EasyJet, Deutsche Lufthansa AG and existing shareholder Etihad Airways PJSC, according to the il Messaggero newspaper.
There’s a “strong likelihood” that Ryanair will convert 100 options for Boeing Co. 737 Max jets into firm orders, possibly including the larger Max 10 version launched last month, though a decision is only due in the next year, Sorahan said. The carrier ordered 10 additional Max 200s in June, for a total of 110, and has extended leases on 10 older 737-800s.
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