Ryanair profit up 4% in first quarter, maintains FY guidance

Low-cost carrier Ryanair flew higher on Monday after it posted a rise in first-quarter profit as traffic grew and maintained its full-year profit guidance, although the company warned of “significant risks” post Brexit.

Net profit increased 4% to €256m as traffic rose 11% to 31m and revenue grew 2% to €1.65bn. The average fare fell 10% to €39.92, but this was offset by a 9% reduction in unit costs.

Chief executive officer Michael O’Leary said: “This modest 4% increase in Q1 profit to €256m is in line with previous guidance. The absence of Easter in Q1 and ongoing 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.”

The company said it still reckoned profit would rise approximately 12% to a range of between €1.38bn and €1.43bn

However, the company – which had campaigned for the UK to remain in the European Union – cautioned there were significant risks following the vote to leave.

“In the near term we expect that Brexit uncertainty will lead to weaker sterling, slower growth in the UK and EU economies and downward pressure on fares until the end of 2017 at least. Over the longer term, if the UK is unable to negotiate access to the single market/open skies it may have implications for our three UK domestic routes and UK nationals on our share register but these risks are not material and will be manageable.”

Ryanair said that in the meantime, it will pivot its growth away from UK airports, focusing more on growing at its EU airports over the next two years. The company will cut capacity and frequency on many London Stansted routes.

Atif Latif, director of trading at Guardian Stockbrokers, said the key focus is guidance being maintained when the worst was being priced in.

“The plan to move away from UK airports into the EU we see as a positive move and this should counteract weak domestic trends with greater promotions allowing load factor increases in collaboration with strong fuel hedging.

“Overall a solid set of numbers but we see scope for a lack of growth in the coming quarters and would see this move today as more short covering.”

At 1140 BST, Ryanair shares were up 5.9% to €11.54.