Ryanair annual profit up 10% but FY19 guidance cut

Budget airline Ryanair posted a 10% jump in full-year pre-tax profit on Monday but struck a cautious note on its FY19 outlook on the back of rising costs and flat fare growth as it cut its full-year guidance.

In the year to the end of March 2018, pre-tax profit rose to €1.6bn from €1.5bn the year before, as total operating revenues increased 8% to €7.2bn. Passenger numbers were up 9% to 130.3m despite 25 winter aircraft being grounded and the load factor - which gauges how full the planes are - came in at 95%.

Average fares during the year were down 3% to €39.40 and the company cut its unit costs by 1%, although ex-fuel, they rose 3%.

Ryanair said its outlook for FY19 was on the "the pessimistic side of cautious", with traffic expected to grow traffic by 7% to 139m, at flat load factors of 95%, with unit costs due to rise 9% due to higher staff and oil prices which will, when adjusted for volume growth, add more than €400m to its fuel bill.

Ex-fuel unit cost will rise by up to 6% as Ryanair annualises pilot and cabin crew pay increases and invests in the business and its systems to facilitate a six-year growth plan to 600 aircraft and 200m guests a year.

The company, which was forced to cancel more than 20,000 last September due to a rota blunder, guided to broadly flat average fares for FY19 and said profit would fall to a range of €1.25bn to €1.35bn due to higher costs and lower fares.

Chief executive officer Michael O’Leary said: "We are pleased to report a 10% increase in profits, with an unchanged net margin of 20%, despite a 3% cut in air fares, during a year of overcapacity in Europe, leading to a weaker fare environment, rising fuel prices, and the recovery from our September 2017 rostering management failure."

Canaccord Genuity said: "Despite Ryanair’s near term cautiousness we believe its longer term outlook remains attractive given the airline’s low and sustainable cost base and a wide range of growth opportunities at primary and other airports.

"The airline is highly profitable, with enviously high net margins of 20%, and generates an EBITDA of over €2bn. Despite chunky capex commitments the company continues to return cash to shareholders (currently executing a €750m share buyback).

At 0915 BST, the shares were up 1.7% to €15.76.