Ryanair Profit Rises, Cuts Annual View On Fall In Prices, Stock Tumbles

(RTTNews) - Irish low-cost airline Ryanair Holdings Plc. (RYA.L, RYAAY) Monday said profit for the first half of the year rose marginally, helped by increased traffic. However, the company cut its full year profit forecast, citing a fall in average prices. The stock tumbled over 11 percent in early morning trade.

Profit attributable to equity-holders of the parent advanced to 601.9 million euros ($812 million) from 595.6 million euros. Earnings per share advanced to 41.85 euro cents from 41.20 euro cents.

Pre-tax profit climbed to 685.4 million euros from 679.3 million euros last year.

Total operating revenues improved to 3.255 billion euros from 3.106 billion euros in the prior year.

Traffic grew 2 percent to 49 million passengers. Load factor was up 1 percentage point to 85 percent.

Revenue per passenger advanced 2 percent due to a 22 percent increase in ancillary revenues owing to the successful roll out of reserved seating, priority boarding and higher credit/debit card fees.

Unit costs increased 3 percent, largely due to a 7 percent increase in fuel prices. Excluding fuel, sector length adjusted unit costs fell 2 percent amid cost efficiencies.

Average fares fell 2 percent, impacted by one off events like the timing of Easter, the summer heatwave in northern Europe, French ATC strikes in June and weaker sterling. In response to these market conditions, Ryanair stimulated traffic growth with aggressive fare promotions. Average fares have continued to fall this winter, Ryanair noted.

Looking ahead, Ryanair said market pricing remains weak and it would continue to promote low fare seat sales throughout the remainder of the year. While forward bookings are running slightly ahead of last year, the softness in fares and yields continues.

Based on reasonable visibility, the company expects third-quarter fares to fall 9 percent, and fourth-quarter fares to fall by up to 10 percent. The cost discipline is expected to see sector length adjusted cost per passenger fall 7 percent in the second half.

However, amid the continuing fare and yield softness, full year profits are expected to be lower than the previous guidance of 570 million euros to 600 million euros. The airline now expect the full year out-turn to be between 500 million euros to 520 million euros due to this lower fare environment.

RYA.L fell 11.56 percent in early morning trade to 5.39 euros.