Ryanair profit doubles, share buyback announced

Ryanair posted a jump in third quarter profit as traffic grew strongly and the budget airline announced a €800m share buyback programme.

For the three months ended 31 December, profit after tax rose to €103m from €49m as traffic increased 20% to 25m and revenue gained 17% to €1.33bn.

Chief executive officer Michael O’Leary said: “We are pleased to report that our low fares policy delivered strong Q3 traffic and profit growth. It is clear that millions of new customers are switching to Ryanair for our ‘load factor active/yield passive’ pricing, our expanding route network and the success of our Always Getting Better ("AGB") customer experience programme. “

The company said it experienced weaker pricing and bookings immediately after the terrorist events in Paris and Brussels.

It reacted to this softness by running price promotions and discounted fares to stimulate double digit traffic growth and said that while average fares fell 1%, this was offset by lower unit costs.

In addition, Ryanair said its board has approved an €800m share buyback to begin on 5 February, in light of the group’s rising profitability and improving cash flow.

The buyback is expected to be carried out over a nine-month period and once complete, Ryanair said it will have returned in excess of €4bn to shareholders over the past eight years.

The company had net cash of €350m at December 2015 notwithstanding capex of €726m, shareholder distributions of €687m and debt repayments of €281m during the current financial year.

Looking ahead, Ryanair said it remains comfortable with its full year guidance that net profits will be towards the upper end of the €1.17bn to €1.22bn range.

“We caution, however, that this guidance is heavily dependent on the absence of further unforeseen events impacting close-in bookings and yields in Q4, especially over Easter, where we are working to deliver 26% traffic growth."