Ryanair profit forecast sends shares soaring

RYANAIR, Europe’s biggest low-cost airline, said that its annual profit beat its forecast, sending the stock to the highest level in more than two years.

Net income in the last 12 months was “not less than” €310 million, compared with the previous projection for €275m, the airline said yesterday.

Earnings were helped by stronger-than-expected passenger bookings and higher average fares, the airline said.

Air France-KLM Group, Europe’s largest airline, said it is sticking to a forecast of breaking even on an operating level, excluding the effects of fuel-hedging costs, in the fiscal year that began yesterday.

“The situation for airline traffic is improving, and is improving faster than we had been thinking,” Brian Pearce, chief economist for the International Air Transport Association (IATA), said. “At the moment it’s looking good.”

IATA, the trade group that represents about 230 carriers carrying 93% of the world’s international air traffic, forecast that airlines will lose a collective $2.8 billion (€2bn) in 2010, half the previous estimate, as emerging markets lead a rebound in travel.

Mr Pearce said that Geneva-based IATA, which will revise the outlook in early June, is still comfortable with that figure.

Ryanair is not a member of the association. Ryanair gained as much as 32 cents, or 8.7%, to €4 in mid-afternoon trading, the highest intraday price since January, 2008, but later closed at €3.97. The stock has gained 21% this year, valuing the carrier at €5.9bn. The carrier is scheduled to announce its full-year earnings on June 1 next.

“Momentum with the airline looks to be quite strong,” said Stephen Furlong, an analyst at Davy Stockbrokers with an “outperform” recommendation on Ryanair shares.

“While things are still difficult for the consumer, they seem to be in a better place now than they were last year.”

Finnair Oyj, Finland’s state-controlled airline, said that it reached an agreement with pilots to save €20m in costs annually. The pilots’ union at Deutsche Lufthansa, Europe’s second-biggest carrier, said that it agreed “immediately” to the company’s offer to seek mediation in a dispute over pay and job assignments.