Ryanair Holdings Plc said fiscal first-quarter earnings advanced 25 percent and that full-year numbers should be toward the top end of its forecasts, while cautioning that over-capacity could weigh on average fares.
Net income rose to 245.1 million euros ($380 million) in the three months through June from 196.8 million euros a year earlier, Dublin-based Ryanair said Monday. Fares should be stable through the summer but may dip later in the year.
Earnings for the whole of fiscal 2016 are likely to be at the higher end of a previously forecast 940 million euros to 970 million euros range, according to a statement. Ryanair said it will curb plane groundings this winter as it seeks to tempt passengers from network airlines such as Deutsche Lufthansa AG, with new routes in Germany, Sweden and Israel due later in 2015.
“It’s been a good summer, bookings are strong,” Chief Financial Officer Neil Sorahan said in an interview. “We’ve got a slightly better first half but we’re fairly cautious into winter. We’ve got very limited visibility on our bookings.”
Shares of Ryanair traded 13 cents, or 1.1 percent, lower at
12.19 euros as of 12:42 p.m. in Dublin after earlier falling as much as 3.2 percent. The stock has gained 29 percent this year, valuing the company at almost 16.5 billion euros.
Earnings were in line with the 245.5 million euros predicted by analysts. Sorahan said forward reservations for the first half through September are about 4 percent up on last year, though bookings for the third and fourth quarters stand at only 10 percent and 2 percent respectively.
Ryanair’s planes flew 92 percent occupied in the first quarter, 6 percentage points higher than the previous year, and the carrier said it will remain focused on pricing tickets to fill flights rather than maintain yields.
A fare slide that reached 4 percent in the first quarter, while flattening out in the summer, is likely to take hold again in the winter, reaching as much as 8 percent, as capacity grows and rivals seek to hang on to market share, Sorahan said.
Cuts in unit costs of about 3 percent for the year, versus a previously targeted 2 percent, will help offset the impact of that trend, he said. Unit costs excluding fuel fell 7 percent in the first three months.
Chief Executive Officer Michael O’Leary has sought to broaden Ryanair’s customer appeal by toning down his sales pitch and offering a range of paid-for extras to entice more business passengers and families. The carrier will roll out a new website in October.
Ryanair boosted passenger numbers 16 percent to 28 million in the first quarter and has increased its full-year target by 3 million people to 103 million. The carrier is taking delivery of 32 Boeing Co. 737-800s by the end of the fiscal year.
Ryanair said it is now 70 percent hedged as far ahead as fiscal 2017 at an average price of $66 a barrel. It’s 90 percent hedged at $91 a barrel for the 2016 financial year.