Friday 15 December 2017

Ryanair's new image pulls in the customers


Ryanair raised its full-year profit forecast as a campaign to improve service quality pulled more customers away from its struggling rivals.

The airline has let travellers choose their seats, eased restrictions on hand luggage and cut penalty charges, giving them fewer reasons to book flights with more expensive, full-service airlines.

It is also trying to focus on more primary airports that land holidaymakers and business travellers closer to their destinations, addressing another weakness versus competitors.

The changes followed a fall in profits last year that pushed the Irish airline to rethink a focus on price over service that often left customers disgruntled and tarnished an image chief executive Michael O'Leary said was seen as "cheap and nasty".

Ryanair said its first-quarter profit more than doubled to €197m, beating a consensus forecast of €157m from analysts polled by the company. It raised its profit forecast for the year to March 2015 to €620-€650m from €580-€620m.

Fares are likely to fall in the second half of its financial year, the company said, as rivals compete more aggressively on ticket price.

Yet it is still in rapid expansion mode, and plans to raise winter season seat capacity by 8pc. Ryanair will take delivery of the first of 180 new Boeing aircraft in September.

That could spell further bad news for big European airlines such as Lufthansa and Air France-KLM, which have both warned of lower profits.

"A lot of the problems that are hitting the sector are not hitting Ryanair because, if anything, Ryanair is the protagonist - they're the ones that are making problems for other players," said Gerard Moore, a Dublin-based analyst at Investec stockbrokers.

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