Ryanair doubles quarterly profit, plans $868 million buyback

Ryanair Holdings doubled fiscal third- quarter earnings as passenger numbers surged, and said it will return 800 million euros ($868 million) to investors via a share-buyback program.

Profit after tax increased to 103 million euros in the three months ended Dec. 31 from 49 million euros a year earlier, aided by a 25 percent surge in passenger numbers to 20 million, Dublin-based Ryanair said Monday.

While the earnings figure was short of the 118.2 million euros anticipated by analysts, Europe’s biggest discount airline said traffic should jump 26 percent in its final quarter, 4 points more than expected, allowing it to report a full-year profit at the upper end of a 1.17 billion-euro to 1.22 billion- euro range.

“Ryanair remains a clear leader among European low-cost carriers,” Johannes Braun, an analyst at Commerzbank, said in a report to investors. Its “stepped-up growth” in Germany, the U.K. and Spain should “worry” low-cost and network rivals alike, he said.

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The share buyback, prompted by “rising profitability and improving cash flow,” starts on Feb. 5 and will span nine months, Ryanair said in a statement. Once the process is complete, the carrier will have returned more than 4 billion euros to investors over the past eight years, it said.

Ryanair jumped as much as 6 percent, the steepest intraday gain since Sept. 9, and was trading up 5.7 percent at 14.47 euros as of 3:21 p.m. in Dublin. The stock has surged 45 percent over the past 12 months, valuing the company at 19.1 billion euros.

The airline grounded 10 fewer planes this winter than previously, while benefiting from a decline in jet fuel prices of almost 40 percent over the past 12 months. Still, air fares weakened after the November terror attacks in Paris, and a 1 percent pricing decline in the third quarter is set to accelerate to 6 percent in the current period, Ryanair said.

“We noticed a bit of softness post- those events, and as we always do when there is a bit of softness in the market, we stimulated it with fare promotions and discounts,” Chief Financial Officer Neil Sorahan said in an interview.

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The fourth quarter will also see yields affected by a weaker British pound, and earnings growth will be held back by an Italian tax and an increase in non-fare ancillary revenue that will lag behind passenger-revenue growth, Ryanair said. The full-year forecast is hence “heavily dependent on the absence of further unforeseen events,” especially over Easter, it said.

Ryanair has sought to refine its no-frills image by improving its website, offering more services to primary airports and providing paid-for extras to entice more business passengers and families.

The repositioning strategy, known as Always Getting Better, helped keep the proportion of seats filled above 90 percent in the third quarter. Ryanair attracted 100 million passengers in calendar 2015 and said it aims to fly 106 million in the fiscal year, up 1 million from the previous target.