Ryanair lifts full-year outlook after strong first quarter

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Irish carrier Ryanair has lifted its full-year outlook after posting first quarter net profits up strongly to €197 million ($265 million), though this in part reflects the later falling of the busy Easter holiday period this year.

The net profit for the three months ending June 2014 compares with €78 million at the same stage last year. The improvement was based on average fares up 9% during the first quarter - a comparison helped as Easter fell in its financial fourth quarter in 2013/14 - and passenger numbers up 4%. Revenues grew 11% to just shy of €1.5 billion.

The carrier's unit costs fell by 2% over the same period, and excluding fuel, rose by 1%.

"The earlier launch of our summer schedule and actively raising our forward bookings has delivered a 4% increase in load factor to 86% and enabled us to better manage close-in yields," Ryanair chief executive Michael O'Leary.

"Based on these Q1 results and our strong forward bookings it is clear that we are on track to deliver a strong H1, during which traffic will grow by 3%, and fares will rise by 6% subject to late booking fares in August and September," he says.

But he warns against any "irrational exuberance" based on what continues to be a difficult economic environment.

"We expect H2 to be characterised by a much softer pricing environment as many competitors are lowering fares, partly in response to Ryanair's strong forward bookings," he says. The airline also expects its own strong capacity growth of 8% over the winter to put downward pressure on yields. It expects these to fall between 6-8% in the second half, though also sees unit costs rising less sharply than previously expected.

"We now expect full year traffic to grow by 5% to 86 million. This increased traffic and higher load factors, combined with a slightly improved performance on unit costs allows us to cautiously raise our full year profit after tax guidance (from the previous range €580 million to €620 million) to a range of €620 million to €650 million," O'Leary says, but adds this dependent on second half yields over which it has no visibility.