Ryanair (LON:RYA) today reported its first quarter results announcing that the company remains on track for record profits despite Britain’s decision to leave the EU.
Today the company reported profits for the three months ending June 30 that rose 4% from £245m in 2015 to £256m. This was due to an 11% increase in traffic rising to 31m alongside an average fare price dropping 10% to €39.92.
The company also reported a 2% increase in revenue rising up to £1.653bn helped by a customer increase of 11% growing up to 31.2m compared to 28m seen in the previous year.
The release has caused a stir in the markets this morning however, as Europe’s leading passenger airline Ryanair announced that it will ‘pivot’ it’s growth away from UK airports as it will now focus its growth in European airports.
The cut will see its formidable 100m+ passengers a year from Britain in its largest sector Stansted Airport be largely capped once it’s decision takes place.
Ryanair said Britain’s decision to leave the EU was both ‘surprising and disappointing’ after actively campaigning for a remain vote. As a result, Ryanair said it feels this will lead to greater economic instability and will reduce consumer confidence. The airline said that it expects the Brexit uncertainty will lead to a weaker sterling and slower growth in the UK putting a downward pressure on fares until the end of 2017.
Ryanair’s Michael O’Leary said:
“This modest 4% increase in Q1 profit to EUR256m is in line with previous guidance. The absence of Easter in Q1 and on-going market volatility arising from terrorist events, and repeated ATC strikes (particularly in France) weakened fares on close-in bookings and caused almost 1,000 flight cancellations.
We remain committed to our load factor active/yield passive strategy which is why Q1 fares fell 10% to under EUR40. Traffic rose 11% and load factor improved 2 points to 94% as our Always Getting Better (“AGB”) customer experience programme continues to win new customers and new markets. Ancillary sales rose to 26% of revenues (24% in PY Q1). Cost control remains core which is why unit costs reduced 9% (ex-fuel down 4%) “
Prior to the EU Referendum Ryanair announced a €800m share buyback programme. The Brexit result meant that the company increased this figure to €886m with a completion rate at the end of June of an average price of EUR13.48 per share.
Ryanair has returned a total of €4.2bn to its shareholders since 2008.
At 10:32am BST Ryanair Holdings PLC traded at 11.49 +0.59 (5.41%)
25/07/2016