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Ryanair raises profit forecast after putting up fares

• Full-year profit forecast now €480m
• Quarterly profit of €15m
• Fares up by an average of 17%
• Fuel prices pose ‘significant challenge’ – O’Leary

Ryanair has raised its profit forecast, saying higher ticket prices are more than making up for expensive fuel and reduced capacity, underlining the resilience of the low-cost sector as long-established airlines struggle.

The Irish low-cost carrier, Europe’s largest, increased its full-year profit forecast by 9% to €480m (£400m) after posting revenue growth of 13% in the three months to 31 December.

“The EU recession, higher oil prices, the unfolding failure of the package tour operator model, significant competitor fare increases and capacity cuts, has created enormous growth opportunities for Ryanair,” the chief executive, Michael O’Leary, said in a statement.

It reported a net profit of €15m, well ahead of a €16m loss forecast in a poll of 21 analysts compiled by the company, after it grounded 80 of its 270 planes over the winter due to high fuel costs.

Revenue was €844m in the quarter, ahead of an average analyst forecast of €819m. Average fares rose 17% in the quarter from a year earlier, making up for a 2% fall in passenger numbers.

A forecast €350m increase in the fuel bill next year “poses a significant cost challenge”, O’Leary said.

The Irish carrier follows British low-cost rival EasyJet in posting strong revenue growth as higher-priced rivals are battered by fuel costs and a struggling global economy.

German group Lufthansa and Air France-KLM have cut profit forecasts and slashed plans to expand in 2012.

Ryanair, which expects passenger numbers to grow to 80 million this year from 76 million in 2010, carried more international scheduled passengers than any other airline in 2010, according to the International Air Transport Association.

Its share price is up 18% since it released its half-year results on 7 November, closing on Friday at €4.15, compared with an increase of 13% in the broader Irish market. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds