Ryanair Says Profit To Weather Softer Fares

Ryanair forecast record passenger numbers will enable it to hit its annual profit target, despite falling ticket prices due to security alerts in Europe.

Ryanair said average fares will continue to fall in the coming months as more airlines take advantage of lower fuel prices.

It also announced an EUR€800 million (USD$867 million) share buyback over the next nine months.

Ryanair lifted its full-year profit forecast by 25 percent in early September, citing poor summer weather in Northern Europe, weak sterling and the impact of improved customer service.

But security alerts after attacks in Paris in November and strong competition has since forced it to cut average fares, which fell 1 percent in the last three months of 2015 and will fall 6 percent in the first three months of 2016.

"We expect the lower fare environment to continue for the foreseeable future" with some respite during the summer months, chief executive Michael O'Leary said.

Rival easyJet last week said its revenue per seat fell 3.7 percent in the three months to December 31 and that it would continue to fall in early 2016.

O'Leary said he expected to pass on a "significant amount" of EUR€430 million of Ryanair's fuel cost savings, but that would be offset by a further 8 percent increase in passenger numbers in 2016.

Ryanair last year was the first airline in the world to carry 100 million international passengers and on Monday increased its forecast for its financial year to March 31 to 106 million from 105 million.

It plans to carry 26 percent more passengers in the first three months of 2016 compared to the same period last year.

'LITTLE UPSIDE' ON PROFIT

Ryanair re-affirmed its expectation to post net profit at the upper end of a range of EUR€1.175 billion to EUR€1.225 billion for its financial year.

O'Leary said that the current forecast was heavily dependent on a strong Easter and the presumption there will be no major militant attacks in Europe.

Ryanair will start its EUR€800 million share buyback in the coming days, but said it had no plans to commit to a regular dividend or share buy back, and that these would be ad hoc.