* FY profit up 6 pct, fares down 13 pct
* Says ticket prices to keep falling
* Eyes opportunities for faster expansion
* To target Air Berlin, Alitalia
(Recasts with CEO quotes, details on costs)
By Conor Humphries
DUBLIN, May 30 Ryanair announced a
record annual profit on Tuesday in a vindication of its strategy
of cutting fares to boost market share, and said it would turn
up the heat further on rivals.
Its warning to competitors came as one of them, British
Airways, was counting the cost of a huge IT failure that left
75,000 passengers stranded over a holiday weekend.
Ryanair, Europe's largest airline by passenger numbers, has
helped drive down short-haul ticket prices in Europe by
increasing its capacity by 33 percent, or about 30 million
seats, in the past two years.
Its cost base, widely acknowledged as the lowest of Europe's
major carriers thanks to low plane purchase, maintenance and
staff costs, has allowed it to undercut rivals while still
making a profit.
The Irish airline made a profit after tax of 1.3 billion
euros ($1.5 billion) in the year to the end of March, in line
with analyst forecasts, even as it slashed ticket prices to fill
almost 14 million seats added during the period.
"I take comfort from the fact that we can increase profit in
a year where fares fall by 13 percent," Chief Executive Michael
O'Leary told analysts.
"We have seen profitability double ... over a three year
period and frankly I see no reason why that trend won't
At 1400 GMT, Ryanair shares were up 2.5 percent at 18.185
FARE CUTS SLOWING
In the coming year, Ryanair is set to slow the pace of
capacity growth to around 8 percent, or 10 million seats, and
expects ticket prices to fall by 5-7 percent.
That will see its average fares fall by around 5 percent
over the key summer months, likely putting pressure on rivals.
"I see a lot of airlines talking up the first half of the
year and talking up (revenue per passenger) yield performance. I
think that is a little overdone," O'Leary said.
British Airways owner IAG had said before its
disastrous IT failure that it expected quarterly revenue per
passenger mile flown to rise year-on-year for the first time
since 2014 in April to June.
Air France and Lufthansa have also said
pricing and bookings are improving.
O'Leary was upbeat about priority markets including Italy,
where Ryanair expects Alitalia to cut its short-haul operations
as part of restructuring, and Germany, where he said any
acquisition of Air Berlin could open up airport slots.
Ryanair would be happy to sacrifice short term profitability
to dislodge incumbents and open new markets, he added.
Ryanair is in talks with Boeing about buying up to five
extra planes and extending the leases on 10 more over the next
two years. In recent weeks, it has suggested it could source
additional planes if AlItalia or Air Berlin were to free up
It has also spoken to around 200 airports about moving
capacity from Britain in the event of a "hard Brexit," where
Britain would leave the EU's single market, O'Leary said.
In a sign of Ryanair's financial confidence, it announced a
600 million euro share buyback to start immediately.
However, O'Leary warned there were clouds on the horizon,
including Brexit, which he has said could lead to a total
breakdown in all flights between Britain and the EU for a time.
Brexit could also force some British investors in Ryanair to
sell their stakes as EU airlines must be majority owned by EU
The impact on bookings of the recent suicide bombing in
Manchester in which 22 people died was likely to be short-lived,
but a further attack could knock bookings off course, he said.
($1 = 0.8945 euros)
(Editing by Greg Mahlich and Mark Potter)