Ryanair share price up, raises its guidance as passenger numbers increase

Ryanair Holdings, Europes biggest bugged airline, increased its profit expectations again after it reported a 22% jump in passenger numbers.

This is the second time the company raises its forecast within a month and the fourth for the year, highly contrasting last year, when Ryanair issued two profit warnings.

Since last year when CEO Michael OLeary promised to enhance customer service and stop “unnecessarily pissing people off,” the company has increased its passengers up to 6.35 million. The company has also removed charges for printing boarding passes, remade its website, started booking allocated seating and increased its hand luggage maximum.

The companys biggest low-cost competitor, easyJet reported only 3% yearly increase in passenger numbers to 4.39 million in November, while smaller Aer Lingus announced that 9% less people booked short-haul flights.

Davy Stockbrokers described Ryanairs results as “phenomenal”.

The Irish carrier said it now expects full-year profit after tax to range from €810 million to €830 million, up from last month, when the company increased its forecast by 20% to land between €750 million and €770 million.

Although Ryanair increased seat capacity by 13%, the company said that its load factor, ratio between sold seats and capacity, climbed seven percentage points to 88%.

As the final part of its growth plan, Ryanair closed an $11-billion deal for a hundred Boeing 737 Max aircraft, which will boost annual capacity to over 150 million by 2020.

“These new ‘game-changer’ aircraft will allow Ryanair to lower our costs and air fares, while improving our customer experience with more leg room,” said Mr. O’Leary.

Stephen Furlong, analyst at Davy Research, said “We continue to rate Ryanair ‘Outperform’ as it incrementally takes profitable market share and generates positive free cash flow and it is clear that its business model improvements are working”.

There were a lot of speculations around whether Ryanairs CEO will stay with the company, however, Mr. O’Leary shut them all down by putting his signature on a renewed contract extending his leadership for five years.

The company also said it reduced fuel costs by 2% over the next year, by increasing its fuel hedging to 90% at around €93 a barrel.

Ryanair Holdings gained 0.23% on Wednesday and an additional 8.37% on Thursday to close at €9.45 on the ISE, marking a one-year increase of 60.03%. The company is valued at €12.09 billion. According to the Financial Times, 21 analysts offering 12-month price targets for Ryanair Holdings have a median target of €9.50, with a high estimate of €11.00 and a low estimate of €7.60. The median estimate represents a 0.53% increase from the last price of €9.45.