- Title: Ryanair lifts growth forecast, eyes 200 mln passengers per year by 2024
- Date: 7th November 2016
- Summary: LONDON, ENGLAND, UK (FILE- OCTOBER 2013) (REUTERS) RYANAIR PASSENGERS QUEUING VARIOUS OF RYANAIR PASSENGERS BOARDING PLANE
- Embargoed: 22nd November 2016 09:17
- Keywords: Ryanair growth forecast 200 mln passengers per year 2024 results revenue buyback
- Location: LONDON, ENGLAND, UK + UNKNOWN LOCATION + FRANKFURT, GERMANY
- City: LONDON, ENGLAND, UK + UNKNOWN LOCATION + FRANKFURT, GERMANY
- Country: Germany
- Topics: Company News Markets,Economic Events
- Reuters ID: LVA00757G2VM5
- Aspect Ratio: 16:9
- Story Text: Budget airline Ryanair Holdings PLC raised its long-term growth forecast by 10 percent on Monday (November 7), saying it expected to carry 200 million passengers per year by 2024 and secure a more than 20 percent share of Europe's short-haul market as rivals struggle with falling fares.
"The whole uncertainty as to whether the UK will stay in the single market, stay in Open Skies, leave, is very troubling and that's caused us to more than half our growth plans for the UK next year. We're going to cut capacity which we thought would have grown by 12 percent, will now only grow by 5 percent," said Michael O'Leary, Chief Executive, Ryanair.
Already Europe's largest carrier by passengers, with a market share of around 15 percent, Ryanair said it will defer the retirement of around 40 planes to boost capacity to 585 Boeing Co 737 airliners by 2024.
Three weeks ago the Irish airline cut its profit forecast by 5 percent for the year to March due to sterling weakness and intense pricing competition.
But it said it plans to take advantage of its low cost base to prioritise market share over profit margins, increasing capacity by around 13 percent this winter compared to an industry average increase of around 9 percent.
"I think Ryanair has responded to the challenge the way we always do. We've lowered airfares. It means we have high load factors, we have strong traffic growth, profits are not growing quite as fast, profits are only up 7 percent but that's because fares are down 10 percent. But it's a good time to fly because we've never been selling lower airfares," he added.
O'Leary said he was comfortable with a forecast of profit after tax of between 1.3 billion euros ($1.44 billion) and 1.35 billion euros.
Profit after tax for the six months to the end of September was 1.17 billion euros ($1.30 billion), in line with analyst forecasts. (Full Story)
Ryanair said it would return an additional 550 million euros to shareholders by February in a share buyback.
Ryanair shares have outperformed many of their peers in recent months as the sector struggled to come to terms with Britain's vote to leave the European Union and a flood of capacity that has driven down prices.
British Airways owner IAG on Friday stuck to its main long-term earnings and margin growth targets but scaled back its plans to expand capacity.
Budget rival easyJet in October warned that annual profit had fallen by more than a quarter and hinted that trading would remain tough.
Ryanair built its business by striking low-cost deals with small airports far from city centres, but on Monday it said by the end of this year it will begin flying mainly to primary airports, increasing its competition with traditional legacy carriers.
Last week it announced plans to fly from Frankfurt Main, one of Europe's busiest hubs.
"Frankfurt have come to us, we've negotiated a resonably lower cost incentive growth agreement that's available to other airlines if they want to grow in Frankfurt Main as well. It does give us a more resonable cost base in Frankfurt. I think what Franfurt are worried about is that Air Berlin is continuing to restructure and cut back. They see their traffic either stagnating or declining and they want somebody to come in there and grow the business," commented O'Leary.
O'Leary said an increased focus on selling additional services via its website and phone apps was also helping to boost sales of reserved seating and premium business fares.
Ryanair's business model is to fill planes irrespective of ticket price to minimise passenger costs and boost spending on extras.
On Monday said it expected to secure 30 percent of its revenue from optional extras by 2020, up from 20 percent.
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