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Ryanair has lifted its profit forecast for a third time in nine months through higher ticket prices and new charges for passengers carrying luggage on to its aircraft.
Shares in the Irish-based budget airline soared 6.4 per cent on the third-quarter results and growth during the seasonally weak winter period exceeding even the most optimistic market expectations.
As a result Ryanair increased its annual net profit forecast to €390 million ($737 million), an 11 per cent increase on the €350 million guidance it had previously given. The bumper results highlighted the difficulties of its rival British Airways.
The British operator said last week that pre-tax profit was down 32 per cent during the third quarter and warned of a significant slip in revenue as the industrial dispute with its trade unions had affected bookings.
In contrast, Ryanair said its pre-tax profit leaped 30 per cent to €47.7 million during the same period, with revenue 33 per cent higher at €492.8 million. The budget airline carried 10.3 million passengers during the quarter, a 19 per cent increase on last year, and flew a further 3.1 million passengers during January.
Chris Reid, an analyst at Deutsche Bank, said that the results were boosted by a one-off benefit of up to €20 million through the early termination of a relationship with a hotel-reservation partner but still beat expectations stripping out that benefit.
Michael O'Leary, Ryanair's chief executive, described the performance as exceptional given intense competition over Christmas and high oil prices. Michael Cawley, the deputy chief executive, said the airline had benefited from higher ticket prices boosted by the introduction of charges of up to €10 to carry on luggage.
Cawley said that fewer than 50 per cent of its passengers checked baggage.
"Customers that cost us less should pay less," he said. Cawley said that Ryanair's decision not to attach a fuel surcharge to its fares had enabled it to edge its prices around 7 per cent higher without affecting passenger volumes. The airline has moved to take advantage of the recent slip in the oil price to extend its fuel hedging policy.
- INDEPENDENT
