Ryanair to use Germany as growth platform

Ryanair has put longer-haul route ambitions to the likes of Russia on hold and will focus on closer destinations like Germany to fuel short-term growth.

The airline yesterday reported after-tax profits of €867m for the 12 months to the end of March — 66% up on the previous year — and promptly said it anticipated at least 10% further profit growth in its current year.

Revenues were up 12%, past the €5.65bn mark, basic earnings per share were ahead nearly 70% at 62.59c, and passenger numbers rose 11% to 90.6m. Costs were down 5% — helped by lower unhedged fuel prices — and the company said its ‘Always Getting Better’ customer improvement programme, now entering its second year of changes, had attracted millions of new customers; while more attractive fares have seen it win market share from competitors at Dublin and London Stansted airports.

Higher route frequencies, as part of schedule changes, have also had a positive effect. Ultimately, the airline saw 10 extra passengers per flight last year.

Regarding expansion plans, marketing manager Kenny Jacobs said that while plans for the eastern Mediterranean were still live, this year would see Ryanair focus mainly on building its presence in Germany, where it only has 4% market share at present.

Mr Jacobs said a smaller fleet and Germany’s travel tax had hampered Ryanair’s growth there in the past, but its growing fleet and strength in Italy and Spain — two favoured destinations for German travellers — as well as dwindling fortunes for the likes of Air Berlin and Lufthansa meant it was an opportune time for the Irish carrier to grow there.

“Ryanair continues to focus on controlled growth as it takes market share from both legacy airlines and low-cost carriers — it is now number one or two in most European markets, with the notable exception of Germany and France,” noted Davy Stockbrokers’ Stephen Furlong.

On IAG’s interest in Aer Lingus, Ryanair said its position was “unchanged” as it has not yet received an offer for its near 30% stake in the former State-controlled carrier, adding that it would consider an offer on its merits if tabled.

Asked whether it’s less interested in the Aer Lingus sale and more interested in disproving the UK Competition and Markets Authority’s ruling that it should lower its Aer Lingus stake to at least 5%, Ryanair said that the IAG approach shows the CMA’s claim — that no other airline would be interested in Aer Lingus should Ryanair keep such a shareholding — to be wrong. It said the authority would be “totally discredited” if it did not reverse its ruling.

Ryanair’s chief operating officer, David O’Brien said the two matters are unconnected, with the CMA being an actual matter and an IAG bid — as of yesterday — still being a hypothetical issue.

Mr Jacobs said that Ryanair’s focus was only on growing its business and that its passenger growth levels far outweigh Aer Lingus.

“The ball is only in our court [on IAG/Aer Lingus] when IAG make an offer to us.”

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