Ryanair's share price jumps 10 per cent as it raises profit forecast 25 per cent after discovering being nice to customers can really pay off

 
Catherine Neilan
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Michael O'Leary has told shareholders to "avoid irrational exuberance" (Source: Getty)

Ryanair's share price leaped 10 per cent on the open this morning after raising its full year profit guidance by 25 per cent, as its bid to win over customers with an improved service takes off.


The budget airline said full year net profit would now come in between €1.175bn and €1.225bn, up from previous estimates of €940m to €970m "due to stronger than expected peak summer traffic and prices"

It directly attributed this to its "Always Getting Better" programme, claiming it was winning over "millions of new customers at slightly higher than expected air fares".

Ryanair said it had originally planned to update shareholders on current trading at its AGM on 24 September, "however the strength of its July and August numbers is continuing into September and the scale of the upgrade (40 per cent up on prior year) requires this update to be brought forward".
First half traffic is up 13 per cent - more than the 10 per cent previously expected - while fares are up two per cent, against expectations that it would be flat.
Third quarter traffic is similarly buoyant, up 15 per cent compared with 13 per cent forecast. Fares are expected to be flat, instead of the previously guided decline of between four and eight per cent.
Ryanair's share price soared 9.8 per cent in early morning traffic.
It's not all good news, however, Ryanair is expecting downward pressure on fares and yields this winter "as it grows strongly in major EU markets such as Germany, at a time when competitors will begin to benefit from lower oil prices as historic hedges unwind".
Ryanair boss Michael O'Leary said: "We have been surprised by the strength of close-in bookings and fares this summer during which we delivered record 95 per cent load factors in both July and August while fares grew by over two per cent, when we had expected them to be flat.
"It's clear that consumers all over Europe are delighted by and are switching to, our "Always Getting Better" (AGB) customer experience programme, our industry leading punctuality and our unbeatable low fares."
In a moment of uncharacteristic modesty, O'Leary added: "We would caution that not all of this improvement is due to either our model or our management. As a "load factor active/yield passive" airline we have clearly benefited from favourable industry trends this summer including bad weather in Northern Europe, stronger sterling encouraging more UK families to holiday in the Med, reasonably flat capacity across the EU industry and lower prices for our unhedged oil.
"Being the airline industry we do not expect these favourable conditions will persist, and we would urge shareholders and analysts to avoid irrational exuberance while we continue to execute our very ambitious growth plans during what we expect to be very attritional and sustained fare wars across Europe this winter".

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