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As airline warns against Brexit...

Ryanair promises further price cuts as profits surge

RyanairRyanair, the Irish budget airline, has been rewarded for its focus on more “customer-friendly” policies, with a surge in annual profits and a promise of more price cuts.

Improvements to punctuality and customer choice, including slim line seats and more leg room are paying off with more travellers using the airline.

It managed to shoulder high fuel costs bought ahead of the oil price slump and reported a 43% rise in full year profits to €1,242 million.

The company also issued a stern warning on the threat of Britain leaving the European Union, saying membership had brought about deregulation of the industry and allowed Ryanair to break up the flag carrier “cartel”.

“Ryanair strongly believes that the UK economy and its future growth prospects are stronger if it remains a member of the European Union,” it said.

“One of Europe’s great success stories was airline deregulation in the late 1980s which allowed Ryanair to break up the high fare cartel of Europe’s flag carrier airlines, and has enabled us to transform air travel, tourism, economic growth and jobs all over Europe. Ryanair is actively campaigning for a “Remain” vote in the referendum on June 23. 

“If the UK leaves the EU then this, we believe, will damage economic growth and consumer confidence in the UK for the next two to three years as they begin to negotiate their exit from the EU and re-entry to the single market in very uncertain market conditions.”

In annual figures, the company reported traffic 18% higher at 106m and the load factor up by 5% to 93%.  The average fare dropped 1% to €46 as unit costs fell 6% (ex-fuel down 2%).

Ryanair’s Michael O’Leary, said: “FY16 was a year in which we delivered significant traffic and profit growth in all 4 quarters.”

This was in spite of the company paying for fuel hedged at $90 a barrel ahead of the collapse in prices in the summer of 2014.

For 2017 it has hedged 95% of its fuel at around $62 a barrel and €/$ is hedged at $1.18 which will deliver fuel savings of about €200m.

It has now 44% hedged for 2018 at approximately $50 a barrel.

“We plan to pass on most if not all of these fuel savings to our customers in lower air fares particularly as we grow capacity over the next 12 months in key markets around Europe,” said the company.

Passenger bookings this summer are up 2% than last year, at lower fares. The 2017 load factor will be similar to last year with traffic growing by 9% to 116m.  It expects average fares to fall by about 7% this year.

Over the year it launched seven bases in Belfast, Berlin, Corfu, Gothenburg, Ibiza, Milan (Malpensa) and Santiago over the period and opened more than 100 routes as it became the first airline to carry more than 100m international customers in a calendar year.

It took delivery of 52  B737 aircraft which will grow the fleet to 380 (net of handbacks) by year end. It has announced seven more bases (Bucharest, Hamburg, Nuremberg, Prague, Sofia, Timisoara and Vilnius) as part of the winter 2017 schedule.

The firm expects full year net profit to rise by about 13%, to a range of €1,375m to €1,425m.

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