No frills airline Ryanair has increased its full year profit guidance after the the airline's third quarter produced better than expected earnings.
Profits after tax between October and December of 2011 were €15m, compared to a loss of €10.3m made during the equivalent period of 2010.
The low cost carrier now says it expects full year profits to be €480m, up from the previous estimate of €440m.
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The return to profitability in the end-of-year quarter will not be too surprising, given that the year before severe weather conditions in both Dublin and London led to numerous calculations, but Ryanair said it had also achieved a better yield as it cut capacity by grounding 80 aircraft to make sure margins remained strong.
Ryanair's Chief Executive, Michael O'Leary, declared himself pleased with the results, which he said were ahead of expectations.
"The 17% rise in average fares (which includes our optional baggage fees) is due to reduced seat capacity, longer sectors, and higher competitor fares/fuel surcharges. Ancillary revenues grew 6% to €177m and rose by 8% on a per journey basis," O'Leary said.
Revenue rose 13% to €844m from €746m the year before. Basic earnings per share came in at €1.02, versus a loss per share of 69 cents the year before.
Unit costs rose 11% due to a 7% increase in sector lengths (flight distance per journey) and an 18% increase in fuel costs. Excluding fuel, sector length adjusted unit costs declined by 1%.
Passenger numbers dropped 2% as a result of the loss of capacity but average fares rose 17%, as competitors' pricing allowed Ryanair extra headroom.
The company is hedging much of its fuel costs for the next financial year at around $99 per barrel but says, at that level, the fuel bill for 2013 will rise by around €350m, which is described as a "significant cost challenge".
Since the open in London the stock has gained 2.14%. Over the last 12 months Ryanair shares are up by 17%.
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