Ryanair Raises Profit Guidance After Christmas Travel Boom

(Bloomberg) --

Airline shares surged in Europe after Ryanair Holdings Plc said it expects to post a bigger-than-expected full-year profit following a spike in lucrative last-minute bookings over the Christmas and New Year holiday.

Europe’s biggest discount airline now anticipates earnings for the 12 months through March of between 950 million euros ($1.06 billion) and 1.05 billion euros, and most likely in the middle of that range, according to a statement on Friday. It had previously forecast 800 million euros to 900 million euros.

The spate of late bookings helped lift yields, a measure of fares, according to Ryanair, which reports third-quarter results on Feb. 3. Sales for January through April are also 1% up on this time last year and that should result in slightly better pricing in the fourth quarter, with the full-year passenger tally reaching 154 million, or 1 million more than previously forecast.

Ryanair’s guidance is a respite to carriers after the International Air Transport Association warned last month that global industry profits would come in lower than forecast as geopolitical tensions, social unrest and uncertainty around Brexit contributed to tougher business conditions. Reduced capacity growth following a spate of European airline bankruptcies and the continued grounding of Boeing Co.‘s 737 Max jetliner may have improved yields.

“If a more benign capacity is indeed the root cause of the upgrade, Ryanair is unlikely to be the only one to benefit,” Daniel Roeska, an analyst at Sanford C. Bernstein in London, said in a note to clients. “With the Max still grounded and capacity growth at lower levels, this may indicate a better yield environment through winter and a more supportive trajectory for sector profits.”

Ryanair shares traded 7.4% higher at 16.34 euros as of 9:56 a.m. in Dublin, levels last seen about 18 months ago. Low-cost rivals EasyJet Plc and Wizz Air Holdings rose as much as 7.4% and 7.2% respectively, while IAG SA, the parent of British Airways, gained 5.3%.

Ryanair has been reining in growth plans for this year after deliveries of the 737 Max jetliner, which had been due to swell capacity, were halted worldwide in March. The Irish carrier has yet to receive any of the high-density variants it has on order.

The picture’s not all rosy, with the Austrian Laudamotion unit set to see losses for the year widen to about 90 million euros from a previous estimate of under 80 million euros after lower-than-expected average Christmas fares amid “intense price competition,” Ryanair said.

To contact the reporter on this story: Siddharth Philip in London at sphilip3@bloomberg.net

To contact the editors responsible for this story: Tara Patel at tpatel2@bloomberg.net, Christopher Jasper, John Bowker

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