Sean Farrell 

Ryanair credits ‘being pleasant to customers’ for profits rise

Budget airline’s boss Michael O’Leary attributes 37% rise in pre-tax profits to change in approach
  
  

Ryanair boss Michael O’Leary
Michael O’Leary has tried to transform the airline’s image by scrapping charges and restrictions, revamping its website and improving customer service. Photograph: Eric Piermont/AFP/Getty Images

Ryanair’s chief executive, Michael O’Leary, claims being pleasant to customers has paid off as the budget airline reported first-half profits up by more than a third.

Europe’s biggest airline by passenger numbers said pre-tax profit for the six months to the end of September rose 37% to €1.09bn (£780m) after a bumper summer. Bad weather in northern Europe and the strong pound encouraged people to fly to warmer climes, the company said.

Fuller planes mean Ryanair will fly 1 million more passengers than it had expected in the year to the end of March. As a result, annual profit is likely to be towards the upper end of the €1.175bn to €1.225bn range it announced in September.

O’Leary, who used to revel in Ryanair’s cheap and nasty image, has tried to transform the airline’s image by scrapping irksome charges and restrictions, revamping the company’s website and improving customer service.

The change in approach followed two profit warnings in late 2013 that showed Ryanair failing to keep up with its rivals, including easyJet, whose friendlier image had attracted flyers.

“If I’d only learned in college that being nice was good for business I’d have done it years ago,” O’Leary told Bloomberg TV. “As long as it boosts profitability I don’t think there is any limit to my niceness.”

The Irish airline’s largest base is at London Stansted airport, where it flies more than 18 million passengers a year.

O’Leary said Ryanair wanted Britain to remain in the European Union when the country holds a referendum planned for 2017 at the latest.

“The referendum is going to be very important for Ryanair as a business and Ireland generally. We very much want the UK to stay [in the EU] … When push comes to shove, when it comes to the Scottish referendum and in the general election, people will vote in the best interests of the economy and stay in Europe,” O’Leary said.

Ryanair expects to fly 105 million passengers this year, up 16% from last year, rising to 180 million by 2024 – 20 million more than previously forecast.

Ryanair also benefited from insuring against the cost of fluctuating oil prices. O’Leary said hedging activities would bring fuel savings of €430m by 2017, buttressing Ryanair for a possible price war after fares weakened in recent weeks.

Prices will fall about 4% in the first three months of 2016, he predicted. Ryanair shares fell 1.6% to €13.28.

“If anyone wants to have a price war in our markets, just let us know. We will be happy to meet you,” he said.

Ryanair is pushing into Germany and O’Leary said he expected Lufthansa, the German flag carrier, to cut prices.

“In a price war, everybody focuses on prices. We win,” he said.

Ryanair has improved its image with customers but its hardline approach to trade unions and workers’ rights has persisted.

Ryanair closed its Danish bases after a bruising row with unions and Copenhagen’s mayor accused it of “social dumping” because of low wages. Ryanair also called for a ban on strikes by air traffic controllers.

 

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