Ryanair share price jumps as profit soars following new customer service programme

 
Joe Hall
Follow Joe
Ryanair lifted profit by 66 per cent. (Source: Getty)

Ryanair's share price soared this morning as it celebrated its 30th birthday with a 66 per cent increase in net profit for the year - beating analysts' expectations.

The figures

The low-cost carrier reported net profit of €867m (£614m) in the 12 months ended March 31 from €523m at the same period last year. Revenue rose more steadily to €5.7bn - a 12 per cent jump to €5bn.

Traffic jumped 11 per cent to 90.6m in the year as the Irish firm expanded into further airports, added business schedules and rolled out a new customer experience programme.

Looking forward, Ryanair steadied shareholder excitement by warning that load factors will slow over the summer months due to increased competition. Profits for 2016 were expected to rise 10 per cent to a range between €940m to €970m.

Ryanair's share price rose more than 4.4 per cent in early trading.

Read more: Ryanair boss Michael O’Leary to seek CMA damages as Irish government gets green light

Why it's interesting

Ryanair has long been slammed for its supposed struggles with customer service. In the past year, the group has tried to turn that around with the "AGB Programme" which aims to "listen and respond" to customers.

It appears to have paid off. Ryanair, which delivered a 90 per cent punctuality rate, has won share gains in what it describes as "substantial markets". The company will now be ordering a number of new aircraft to significantly grow its fleet to meet increased demands over the coming years.

Indeed, as O'Leary himself has previously said: "If I'd have known being nice to customers would work so well I would have started many years ago."

Read more: Michael O'Leary's four lessons for business leaders

However, Ryanair did warn that growth prospects could be held back by what it described as "over-regulation" in Europe's airline industry. Earlier this year the company's chief Michael O'Leary blasted the Competition and Markets Authority (CMA), seeking damages from the regulator for forcing it to massively trim its stake in rival Irish carrier Aer Lingus.

In its results Ryanair said the regulator would be "totally discredited" if it did not reverse the ruling.

What Ryanair said

Europe's airline industry continues to be blighted by over-regulation which frequently places producer monopoly protection above the interest of consumers or growth in tourism and jobs. Examples such as Europe's discredited ETS system, the shambles of our single sky project and the failure to prohibit and the failure to prohibit ATC strikes (either by "no strike" legislation, or binding arbitration) allows the ATC Unions to regularly and repeatedly close Europe's skies...

...While our traffic growth this will be strong, (up 10 per cent), it would be foolish not to expect some irrational pricing response from competitors who cannot compete with our lowest costs and fares.

In short

Ryanair profit continued to soar in 2015, but increased competition next year could see growth descend.

Related articles