DUBLIN (Reuters) – No-frills Irish airline Ryanair said on Monday that annual profits fell for the first time in five years, hit by lower fares and rising fuel costs, but forecast record profits this year .
After-tax profit fell 8.0% to 523 million euros ($717.2 million) in the 12 months to the end of March, the Dublin-based carrier said in an earnings release.
That compares with a record net profit of 569 million euros in 2012/2013, when the airline slashed fares to compensate for weak demand.
The latest figure represents the first drop in annual profits for five years.
“Although disappointing that profits fell 8.0% to 523 million euros mainly due to a 4.0% fall in tariffs, a weaker pound sterling and higher costs of fuel, we responded quickly to this weaker environment last September by lowering fares and improving our customer experience,” the chief executive Michael O’Leary said in the earnings release.
“Ancillary revenue grew 17.0%, much faster than traffic growth, and now represents 25% of total revenue,” he added.
The number of passengers increased by 3.0% to 81.7 million in the last financial year, while revenues also increased by 3.0% to 5.03 billion euros.
Regarding the outlook, Ryanair has predicted that the airline’s traffic will grow by 4.0% to 84.6 million passengers in the next financial year.
He said a strong first half of this financial year “will generate a significant increase in after-tax profits in the range between 580 million euros and 620 million euros”.
Shares of Ryanair rose 5.44% to 6.69 euros in morning trading in Dublin.
The oft-criticized carrier set out to improve its customer experience last year by introducing changes such as an easier-to-use website, reduced boarding pass and baggage fees and assigned seats.
Kenny Jacobs, the company’s new chief marketing officer, appointed during the revamp, said the changes were having an impact.
“The forward bookings we have and the high load factor is because it works,” he told Irish radio on Monday morning.
“Customers want a simpler Ryanair with better service. That’s what they’re getting and that’s why our outlook for (the first six months) is very strong.”
The company said deliveries of its 180 new Boeing 737-800s would begin in September, which would provide “significant opportunities for growth”.
On Friday, ratings agency Fitch followed Standard and Poor’s in giving the airline a BBB+ rating, making it the highest-rated airline in the world.
The move opens the door for Ryanair to raise funds in the debt markets to help fund the Boeing order. (AFP)