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Ryanair lifts profit guidance

Monday, July 28 08:13:26

Ryanair boosted its annual profit guidance on Monday as rivals cuts theirs after the Irish airline booked a better-than-expected first quarter in which net income rose 152 percent from a year earlier.

Europe's biggest budget airline raised its forecast for full-year profit to between 620 million euros and 650 million euros in the year to March 2015, up from a range of 580 million euros to 620 million euros previously.

The rise comes in the wake of profit warnings by rivals Air France-KLM and Lufthansa and after Ryanair called an end to decades of famously austere service with the promotion of a new customer-friendly image from late last year.

"We've made a lot of service improvements over the last six or seven months and we're seeing the benefits in terms of rising profitability," Ryanair's Chief Financial Officer Howard Millar told Reuters in a telephone interview.

Ryanair said strong forward bookings from a strategy aimed at tempting passengers to book their flights earlier increased its confidence for the year ahead and would see traffic grow by 3 percent in the first half and fares increase by 6 percent subject to late bookings.

That followed a 9 percent first-quarter rise in fares that helped Ryanair earn 197 million euros after tax, better than a forecast of 157 million euros in a poll of analysts conducted by the company and the 78 million euros it made a year earlier.

Ryanair, which said its first-quarter figures were somewhat distorted as Easter did not fall in the same period last year, expects a much softer pricing environment in the second half of its financial year as competitors cut fares, partly in response to Ryanair's strong forward bookings.

It said it planned to aggressively raise capacity this winter by 8 percent to take advantage of growth discounts and build out business-friendly routes.

Ryanair shares rose in advance of the results after Chief Executive Michael O'Leary told Reuters he did not plan to cut profit forecasts for the current financial year despite warnings from its rivals.

Shares closed on Friday at 6.85 euros, 3 percent higher than mid-July when O'Leary gave the assurance on guidance. (Reuters)

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