Ryanair doubles profit after slashing fares following terror attacks

Ryanair more than doubled its post-tax profit in the third quarter to €103 million following a 20% increase in traffic to 25 million.

During the three months to the end of December, the airline’s average fares fell 1% to €40 and load factors rose 5% to 93%. At the same time, unit costs fell 5%.

Revenue was €1,330 million, up 17% and its net margin was 8%, up from 4% during the same period last year.

The airline said it had reacted to a fall in demand for travel following the terrorist attacks in Paris and Brussels by slashing fares, resulting in higher passenger numbers.

It said fares during the fourth quarter were expected to be down 6%.

Chief executive 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."

The airline said its four new bases opened in the third quarter in Berlin, Corfu, Gothenburg and Milan had enjoyed strong advanced bookings.

It is expecting double digit traffic growth this winter in the UK, Spain, Italy, Portugal, Poland, Germany and Denmark after adding 119 new routes.

New bases will open in Belfast and Ibiza in March and Ryanair said new routes and destinations for next winter will be announced during February, including its first base in Romania which opens in November.

"Our AGB programme and lower fares are driving strong forward bookings, higher load factors and accelerating traffic growth," added O’Leary.

"We must again raise our full year traffic target to 106 million (from 105m previously guided).

"This represents a 17% increase on last year’s 90.6 million customers.

"In October we launched our new website and mobile app both of which are performing well.

"In November we ran a number of market leading promotions for Black Friday and Cyber Monday.

"Since January our new aircraft are delivering with the Boeing Sky interiors and slimline seats which will provide our customers with more leg room and an improved on board experience.

"From February 1 our cabin crew will be wearing our new (Irish designed) uniforms.

"We will announce further initiatives over the coming months as we move into year 3 of our AGB programme."

The airline announced it had taken advantage of the recent fall in oil prices to extend its fuel hedges to the end of its financial year in 2018.

For next year, its fuel is 95% hedged at approximately $62 per barrel and at $1.17 to the euro, delivering fuel savings of €430 million next year.

"We plan to pass these further fuel savings to our customers in the form of lower airfares particularly as we grow capacity in major markets such as Belgium, Denmark, Germany, Ireland, Italy, Poland, Portugal, Spain and the UK in 2016 and 2017," said the airline.

In January, it concluded a new five-year pay and conditions deal with its 76 pilot and cabin crew bases.

"These long term agreements, along with our low-cost aircraft deliveries, ongoing fuel savings, growth discount airport deals, low-cost bond financing and personalised marketing via our new website will ensure that Ryanair continues to lower its unit cost base while our competitors see their costs rise," it added.