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Ryanair is basically running like a massive cash machine
The airline has promised to pass on savings from cheap fuel to its customers through lower fares.
RYANAIR HAS PROMISED to pass on most – if not all – of the extra cash it expects to take in from the sudden plunge in global oil prices through cheaper airfares.
It comes as the budget airline announced it was forecasting bigger-than-expected profits this financial year for the fifth time due to booming passenger numbers.
Ryanair now expected to reap up to €850 million over the full 12 months and the airline is also sitting on a war chest of €447 million in cash – most of which it will use to buy back shares from investors.
The low-cost carrier said its customers were up 14% to 20.8 million for the three months to the end of December, while profits for the traditional slow season hit €49 million – compared to a loss of €35 million for the same time in 2013.
The airline will open three new bases in Bratislava, Copenhagen and Ponta Delgada, in the Azores, from March and April.
Cheaper flights on the way
But most importantly for punters, Ryanair said its main goal was to keep increasing passengers numbers – rather than trying to make more money from existing customers.
The airline has been buying its fuel in advance for as far ahead as 2017 to make the most of 11-year oil price lows, although it said some rivals would enjoy the benefits of cheaper fuel straight away leading to “downward pressure on airfares” over the next two years.
As lower oil prices kick in over the next two years, Ryanair intends to pass on much, if not all, of these savings to our rapidly growing customer base in the form of lower fares and therefore our profit growth expectations will be modest (next financial year),” it said.
The ‘cash machine’ continues
In a briefing note, Davy airline analyst Stephen Furlong said “Ryanair’s cash machine” was continuing with the latest results.
He said it looked like the airline would be profitable through all quarters of the year, including over the traditional winter lulls.
However, the airline’s share price still took a small hit this morning after it warned investors and analysts to “temper expectations” on its performance for 2016 because of price competition.
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