2nd Feb 2015 06:50
LONDON (Alliance News) - Irish airline Ryanair Holdings PLC Monday announced a EUR520 million special dividend and a EUR400 million share buyback, as it raised its full-year guidance on the back of falling fuel prices and said it swung to a profit in the third quarter of its financial year compared with a loss a year earlier.
Europe's low-cost carrier said it had noticed some softening in prices on forward bookings during the first few weeks of January, but it is now expecting a 5% decline in unit costs for the financial year as a whole. It is therefore raising its full-year net profit guidance to between EUR840 million and EUR850 million, from between EUR810 million and EUR830 million previously.
The airline hedges most of its fuel needs, meaning prices are locked in, but about 10% of its fuel needs are unhedged, and therefore it's felling the benefit from the recent steep fall in oil prices.
Ryanair said it will pay a special dividend of EUR520 million, or EUR0.375 a share, on February 27, and will also start a EUR400 million share bauyback on February 12 which will last for six months. It said the move reflects its improved profitability and cash flow.
The airline reported a EUR49 million profit for the three months to December 31, its fiscal third quarter, compared with a loss of EUR35 million a year earlier. Revenue rose to EUR1.13 billion, from EUR964 million, as passenger numbers rose to 20.8 million, from 18.3 million. Basic earnings per share were 3.53 euro cents, compared with a loss of 2.50 cents.
Airlines and travel companies traditionally make little or no money during the winter months, making most of their profits in the summer months when demand is at its peak.
The company also cited higher load factors for the profit improvement, saying its recently-launched service aimed at business travellers and improvements to its general customer service were pulling in more passengers and ensuring its planes are more full. Its third-quarter load factor rose to 88%, from 82% a year earlier.
"Our new winter routes and bases are performing well. Our significantly expanded winter schedule, which includes more primary airports, city pairs and business friendly frequencies has converted millions of new customers to flying Ryanair. 3 new bases in Bratislava, Copenhagen and Ponta Delgada (Azores) will open in March/April with the benefit of stronger than expected forward bookings as the Ryanair low fare brand is already well known in these countries," Ryanair said in a statement.
The airline said it has taken advantage of the recent dips in oil prices to further extend its fuel hedges into the financial year ending in 2017. It is 90% hedged for the current year at USD95 a barrel and for next year at USD92 a barrel. It's now 35% hedged for fiscal 2017 at approximately USD68 a barrel.
Ryanair declined to comment further on International Consolidated Airline Group SA's attempt to acquire Irish flag carrier Aer Lingus, in which Ryanair is the biggest shareholder.
"Since Ryanair has received no formal approach, or offer for our shares in Aer Lingus, we will not engage in any speculation about this proposal, other than to restate our position which is that the Board of Ryanair will carefully consider any such offer, should one be received, from IAG or any other party, in due course," it said.
By Steve McGrath; [email protected]; @stevemcgrath1
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
RYA.LInternational Airlines