Ryanair has uprated its profit guidance after revealing third-quarter earnings zoomed ahead by more than 20%.
The budget airline, headed by controversial Irish businessman Michael O’Leary, also used an update to reveal a 15% revenue boost, a 3% increase in passenger figures, and an 81 million euro hike in fuel costs.
The carrier expects “substantial growth opportunities” as rivals continue to restructure and cut capacity, and aims to double its passenger base over the next 10 years.
The company is in the throes of a takeover attempt of fellow Irish firm Aer Lingus, and yesterday said it expects to forge ahead with a merger after getting the nod from competition authorities early in March.
Mr O’Leary said his proposals had seen the firm put forward a “radical and unprecedented” package of remedies, including the sale of routes, in an effort to persuade the European Commission the move is not anti-competitive.
“We believe these remedies address every current Ryanair and Aer Lingus crossover route and all other competition issues raised by the commission in its statement of objections,” Mr O’Leary said.
“The remedies involve two upfront buyers each basing aircraft in Ireland to take over and operate a substantial part of Aer Lingus’ existing route network and short-haul business.
“This will be the first EU airline merger which will deliver structural divestitures and multiple upfront buyers.
“We look forward to completing our offer for Aer Lingus subject to receiving approval from the EU competition authorities in early March.”
Ryanair owns a 30% stake in Ireland’s national carrier, with Government ministers in Dublin retaining a share of just over 25%.
The firm has been the subject of sustained interest from Ryanair in recent months, but the board of Aer Lingus has repeatedly recommended that investors refuse Mr O’Leary’s overtures.
A 2006 Ryanair bid for Aer Lingus was blocked by the EC in 2006, which said a deal could harm competition.
Yesterday, Ryanair announced pre-tax profits of 18.1m euro for the three-months to the end of December up 21% from last year. Revenues climbed from 844m euro to 969m euro, while passenger totals reached 17.3m.
Costs-per-passenger increased 11%, while average fares rose 8% in the period.
New routes and bases in Europe were performing well, the company said.
“We expect further capacity cuts and restructurings in Europe as high-fare, loss-making carriers struggle to compete with Ryanair’s expansion at low prices,” it added.
“These trends will create more growth opportunities for Ryanair to grow profitably to 120 million passengers over the next decade.”
The firm said its quarterly yield was boosted by stronger pre-Christmas bookings, with lower-than-expected operating costs delivering better profits than forecast.
However, it expects traffic to drop by 400,000 during the fourth quarter, when it will ground 80 aircraft due to high fees, oil prices and seasonally-weaker demand.
Full-year profits are expected to reach “close to 540m euro” a 7% increase on last year, despite a 18% rise in oil costs.
business@thecourier.co.uk