Ryanair has upgraded its earnings forecasts after a bumper end to the year that saw stronger than expected demand for flying over the Christmas and new year holidays.
Shares rose 10 per cent on Thursday morning after the low-cost airline said on Wednesday evening it expected to report profit after tax of between €1.325bn and €1.425bn in its current financial year ending in March, up from a previous guide range of €1bn-€1.2bn.
Ryanair was able to raise its forecasts after a bumper festive season, when it carried more passengers than expected and was able to charge comparatively high prices.
“Strong pent-up travel demand over the holiday season for the first time in three years, with no adverse impact from Covid or the war in Ukraine, stimulated stronger than expected peak Christmas/new year traffic and fares,” the airline said.
Ryanair forecast profit after tax of “close to” €200mn for the final three months of the year, its fiscal third quarter.
Analysts, industry executives and shareholders have been closely watching out for any signs that demand for flying might soften in the face of the economic uncertainty gripping Europe.
So far peoples’ taste for travel has withstood the cost of living crisis and runaway inflation, despite many airlines raising ticket prices.
“On the strength of this evidence, demand for short-haul leisure travel in Europe remains healthy, and we are increasingly optimistic going into the next reporting season,” analysts at Bernstein said.
Ryanair did warn that its new guidance was “heavily dependent upon avoiding adverse events” in the first three months of 2023, such as a worsening of the war in Ukraine or new developments in the Covid pandemic.
It added that it expected to make a loss in the first three months of the year, traditionally its weakest quarter, because the busy Easter travel season only falls in April.
The airline also flagged a “recent softening” in demand for flying out of the UK, potentially an early sign that demand for travel will soften outside of peak travel periods such as Easter and summer.