DUBLIN: European low-cost airline Ryanair reported its first fall in profits in five years yesterday, blaming tougher competition, but said prospects of strong demand this summer would help lift profits by up to 20 percent in the coming year.
The Irish airline earned ¤523m ($717m) after tax in the year ended March 31, a fall of eight percent on the previous year but investors were relieved the result was better than the airline had predicted and the shares rose 10 percent after it said this year’s profit could climb to ¤620m.
Rivals said last year’s first profit warnings by Ryanair in a decade were the result of it being forced to cut ticket prices after losing business to competitors seen as being more friendly to customers.
In response Chief Executive Michael O’Leary in September called an end to decades of famously austere service, adding seat allocations, easing restrictions on hand luggage and cutting penalty charges.
With forward bookings for the summer five percent ahead of last year, the strategy appears to be working, O’Leary told a results conference call yesterday.