Ryanair Cashes In On Improved Service With Profit Surge

Ryanair's profits surged 66 percent in the year to March as passenger numbers grew almost three times the targeted level on improved service and lower fares, with a more modest 10 percent profit growth forecast for this financial year.

Passenger numbers increased 11 percent to 90 million, compared with the 4 percent targeted at the start of the year, with 100 million expected to fly with the Irish airline in the current fiscal year.

Europe's largest airline by passenger numbers said on Tuesday profit after tax hit 867 million euros (615 million pounds) and would reach between 940 million and 970 million this year. A Reuters poll of analysts had forecast profit of 866 million.

Management said most of the growth was down to its Always Getting Better program aimed at turning round its reputation for poor customer service.

Management credited the program, which has brought in lower fees, flexible tickets for travelers and a move away from small regional airports, for boosting average load factor -- a key industry measure -- by 5 percent in the year to March.

"Always Getting Better is the key, it has been very well received," finance chief Neil Sorahan said in an interview.

Sorahan said if expected "irrational fare cuts" by competitors don't materialize "maybe there is some upside" on the profit forecast, which Chief Executive Michael O'Leary described in a video presentation as "cautious."

Ryanair said its fares would be "broadly flat" in the six months to September. Its main rival easyJet has said revenue per seat would be down by about four percentage points in the three months to June.

Ryanair expects to increase passenger numbers by 10 percent in the year to March 2016, with around half of this at primary airports and about half at smaller regional airports.

Forward bookings to September are on average 4 percent ahead of last year, it said.

Ryanair's share price closed at 10.88 euros on Monday, up 58 percent on a year ago. That compared with an increase of just 1 percent at easyJet and 3 percent in the Thomson Reuters Europe Airlines Index .

Ryanair again declined to comment on whether it planned to accept an offer by British Airways owner IAG for its 30 percent stake in Aer Lingus.

The bid has stalled as IAG waits for the Irish government, which owns 25 percent of Aer Lingus, to commit to selling. The government has said Ryanair's attitude was key to its decision.

"The Board of Ryanair will consider any offer from IAG on its merits, if or when it is received," O'Leary said.