Ryanair on course to make €350m profits

RYANAIR is on track to make net profits of more than €350 million this year, with the market anticipating excellent third-quarter results this morning.

Goodbody Stockbrokers rate Ryanair a buy, placing a 12-month price target of €8.50 on the shares, which opened yesterday at €6.90. The brokers say a short-term target of €7.70 seems reasonable.

Passenger growth in October, November and December was 37%, 43.3% and 63.5%, respectively, according to Davy Stockbrokers.

“Cost per passenger should continue to decline. Q3 net income forecast of €39m (up 35.5%) would leave growth of under 18% for Q4 to achieve full year net income guidance of €230m,” said Davy’s Stephen Furlong.

This puts Ryanair on course for net profits of €350 million for 2003, with the market still reeling for its unprecedented takeover of the loss-making KLM low-cost subsidiary Buzz for just €5m, and the news that it has orders and options on 250 Boeing 737-800 aircraft with a list price of €15 billion.

Vice president of sales for Boeing Commercial Airplanes Toby Bright has conceded Ryanair has negotiated a considerable discount on the €15bn list price.

The good news stream from Ryanair started last week with the announcement of its first Scandinavian base at Stockholm-Skavsta and extra routes out of London.

Just before the weekend, Ryanair had a significant win in the French courts, which should have a knock-on impact on the EC’s formal investigation into Charleroi airport’s agreement with Ryanair.

The French court ruled against Air France who opposed a €1.4m grant given to Ryanair by the Strasbourg Chamber of Commerce.

The market will be also interested to see how ancillary sales to passengers and users of Ryanair’s website have grown.