Ryanair earnings gain 6% as carrier seeks more Boeing jets

[LONDON] Ryanair Holdings Plc reported a 6 per cent gain in annual earnings with moves by rivals to scale back capacity growth set to stem a slide in fares this year.

Net income at Europe's biggest discount airline increased to 1.32 billion euros (S$2.03 billion) in the 12 months ended March 31 from 1.24 billion euros a year earlier, according to a statement Tuesday. The carrier said it's in talks with Boeing Co to add two or three more jets to its existing delivery schedule while extending 10 of the company's planned lease returns through 2019.

While Ryanair has cut costs and slashed prices to undercut rivals and maintain market share amid a glut of capacity on European routes, the slide in fares should ease as supply better matches demand. That will spur an increase in earnings of 8 per cent to between 1.4 billion euros and 1.45 billion euros in fiscal 2018, the Dublin-based company said.

The discounter will accelerate its growth in Italy, Germany, Poland and Romania to take advantage of restructuring by carriers in those countries, including Air Berlin Plc and Alitalia SpA.

"We continue to juggle more opportunities for 2018 and 2019 than our existing fleet growth can accommodate," the company said. "As competitor airlines undergo deep restructuring, we are aware of the need to have additional short haul aircraft to respond quickly as these unique growth opportunities arise." Ryanair also announced plans to buy back 600 million euros of outstanding shares, bringing the total returned to shareholders since 2008 to more than 5.4 billion euros.

The discount giant carried 120 million travelers last year, a 13 per cent jump, at a load factor or seat-occupancy level of 94 per cent. Customers will increase 8 per cent to 130 million in the current year, while the slide in fares will ease to a decline of between 5 per cent and 7 per cent, following at 13 per cent drop in fiscal 2017.

Chief Executive Officer Michael O'Leary cut Ryanair's 2017 earnings forecast to between 1.3 billion euros and 1.35 billion euros last year amid concern that demand would dip following the UK's vote to quit the European Union. The company had earlier forecast net income would be in a range of 1.375 billion euros to 1.425 billion euros.

Lack of clarity on whether the U.K. will opt to remain in Europe's Open Skies could cause "significant disruption" of flights between the two regions for months after Brexit takes effect in March 2019, the company said.

"In the absence of such certainty, or direction, we will continue to pivot our growth away from the UK in 2017 and 2018 to capitalize on the many growth opportunities elsewhere in Europe," it said.

BLOOMBERG