Ryanair: Lower fares drives Q3 traffic growth of 20%

Ryanair today (Feb 1) announced Q3 profits of €103m, a 110% increase on prior year.

Traffic grew 20% to 25m as ave. fares fell 1% to €40 (load factors rose 5% points to 93%) while unit costs fell by 5% (ex-fuel down 1%).

Ryanair’s CEO, Michael O’Leary, said: “We are pleased to report that our low fares policy delivered strong Q3 traffic and profit growth. It is clear that millions of new customers are switching to Ryanair for our “load factor active/yield passive” pricing, our expanding route network and the success of our Always Getting Better (“AGB”) customer experience programme.  Following a strong first half of Q3, we noted weaker pricing and bookings immediately after the terrorist events in Paris and Brussels.  We reacted to this softness by running price promotions and discounted fares to stimulate double digit traffic growth. While average fares fell 1% (previously guided flat pricing), this was offset by lower unit costs.”

Key Q3 milestone

?     Ave. fares down 1% to €40

?     Traffic up 20% to 24.9m (LF up 5 points to 93%)

?     Unit costs fell 5% (ex-fuel down 1%)

?     Q3 profits up 110% to €103m

?     Aer Lingus proceeds (€398m) distributed to shareholders in Nov

?     New website and mobile app launched in Oct

?     5 year pay & conditions deals agreed with all 76 pilot & cabin crew bases

?     First airline to carry over 100m international customers in calendar year (101.4m)

New Routes and Bases

The 4 new bases opened in Q3 (Berlin, Corfu, Gothenburg and Milan Malpensa) enjoyed strong advance bookings and are performing well. This winter Ryanair will deliver double digit traffic growth in Ireland, UK, Spain, Italy, Portugal, Poland, Germany and Denmark as they add 119 new routes to the network.   2 new bases (Belfast and Ibiza) will open in March for summer 2016.  They are finalising their winter 2016 schedule and will announce more new routes and destinations during Feb.  This will include their first Romanian base (Timisoara) which opens in Nov 2016.

Improving “AGB” customer experience

Their AGB programme and lower fares are driving strong forward bookings, higher load factors and accelerating traffic growth. They must again raise our full year traffic target to 106m (from 105m previously guided).  This represents a 17% increase on last year’s 90.6m customers. In Oct they launched their new website and mobile app both of which are performing well.  In Nov they ran a number of market leading promotions for Black Friday and Cyber Monday.  Since Jan their new aircraft are delivering with the Boeing Sky interiors and slimline seats which will provide their customers with more leg room and an improved on board experience.  From Feb 1 their cabin crew will be wearing our new (Irish designed) uniforms. They will announce further initiatives over the coming months as they move into year 3 of their AGB programme.

Read more here.

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