Ryanair spreads its wings over Europe

RYANAIR announced further expansion plans yesterday increasing its growing level of services in Europe which involves a new continental base at Milan's Bergamo airport.

From February 20 the company's first route from London to Spain will start up while it is to double its frequency from London to Milan starting earlier in February.

To boost its services the group will allocate up to four aircraft to its new Milan base, 30 miles from the city centre, operating over 30 flights each day on 6 international routes to London, Frankfurt, Brussels, Hamburg, Paris and Barcelona.

In addition to the new routes, Ryanair will increase its frequency to London by up to six daily flights, four of which will be to London Stansted and two to Luton Airport.

Up to 100 jobs will be generated by the Milan operation with over 2 million passengers projected in the first 12 months.

Passengers using the new services will save up to 200m a year with Ryanair while the group will be offering fares 80% cheaper than British Airways on the same European routes. Ryanair's chief executive, Michael O'Leary said: "Thanks to Ryanair and Milan Bergamo, the era of Alitalia's high fares dominance in the Milan market is gone forever."

Meanwhile Goodbody Stockbrokers remain bullish about the outlook for the group in the current year. It expects the airline, if anything, to beat the 25% projected forecast for the group for the first half year. Due next Monday, analyst Liam Igoe said the results will reaffirm the continuing strong growth at the company. Passengers are up 37% in the first half of 2002 over the same period last year.

The Goodbody model assumes that the yield will have been 5% lower than in the first half of 2001 as Ryanair boosted demand, particularly on new routes, with lower prices.

Further announcements on a new continental base are imminent, with a Swedish base seen as probable, he said.

With Easyjet now committed to purchasing 120 aircraft from Airbus, Ryanair will likely want to accelerate its programme of rolling out new routes and taking up more options on its 737-800s to gain first mover advantage on as many new intra-EU destinations as possible, said Mr Igoe: "We expect it would be especially keen to stitch up as many short haul routes as possible as these facilitate greater frequency per day." An upgrade in Goodbody's forecast for Ryanair is likely if growth in net profits more closely mirrors top line growth.

Goodbody have an 8 price target on Ryanair which traded yesterday at 6.40, against a year high of 7.20 5 March last.