Ryanair Holdings Plc said full-year earnings jumped 66 percent as Europe’s biggest discount carrier ramped up winter capacity and sought to lure a new generation of passengers with a softer approach to customer service.
Read more: Ryanair's Softer Approach Pays Dividends
The shares climbed the most in almost six months in Dublin trading. Profit after tax in the year through March rose to 867 million euros ($948 million), Ryanair said in a statement on Tuesday. For fiscal 2016, the airline predicted profit of 940 million euros to 970 million euros.
Ryanair, which raised its guidance for 2015 earnings five times, is targeting major European airports and looking to tempt passengers away from network airlines such as Deutsche Lufthansa AG and Air France-KLM Group. With low-cost carriers approaching the end of a what Chief Executive Officer Michael O’Leary has described as a “land grab” for market share, the Irish airline is extending efforts to broaden its customer appeal into a third year.
“We’ve rolled out a lot of initiatives that the customers have clearly liked,” Chief Financial Officer Neil Sorahan said in an interview. Allocated seating, an extra carry-on luggage and more business-friendly schedules all helped drive passengers numbers, he said.
Ryanair shares rose as much as 6.6 percent, the biggest advance since Dec. 4. The stock was up 5.8 percent at 11.51 euros at 8:04 a.m.
Average load factors in the first four months of 2015 were up 10 percent and forward bookings are 4 percent higher on average compared to a year earlier, Ryanair said. Falling oil prices have prompted un-hedged rivals to cut fares, forcing Ryanair to follow suit, the carrier said.
“It would be foolish not to expect some irrational pricing response from competitors,” the carrier said. “Even with the benefit of lower oil, aircraft and financing costs, we may suffer periods of fare and yield weakness especially during the second-half winter season.”
The airline said it has sought to lock in lower fuel prices following the plunge in crude and is now 36 percent hedged as far ahead as fiscal 2017 at an average price of $69 a barrel. It is 90 percent hedged at $92 a barrel for the current financial year.
Ryanair boosted full-year passenger numbers 11 percent to
90.6 million people, with load factors climbing to 88 percent from 83 percent, a measure that will rise to 90 percent next year. Unit costs excluding fuel were flat, the airline said.
The carrier, which is targeting 100 million passengers through March 2016, said it will lease six aircraft over the peak summer period to help meet demand. About 50 percent percent of passenger growth will occur at primary airports such as Brussels, Lisbon, Berlin and Rome, Ryanair said.
Ryanair dismissed a ruling by U.K. competition authorities requiring it to sell down its holding in rival Irish carrier Aer Lingus Group Plc. The ruling is “erroneous,” Ryanair said, adding that it remains open to considering an offer from British Airways-parent IAG SA for the Irish airliner “if or when it is received.”
Discussions between Ireland and IAG are continuing after the government, which controls a 25 percent stake in Aer Lingus, rejected the airline’s indicative approach in February. IAG has said it won’t proceed with a full bid for Aer Lingus without the agreement of Irish policy-makers and Ryanair, which controls a
29.8 percent stake.