Ryanair on Monday posted a 26 percent rise in second-quarter net profit broadly in line with analysts' expectations and raised full-year guidance as it pointed to brighter prospects for the winter.
Shares in Europe's biggest low-cost carrier fell 4 percent, however, with traders highlighting the company's failure to beat market expectations as it often has done in the past and worries over its lack of protection against record oil prices.
Ryanair said profit after tax in the three months to the end of September rose to 268.7 million euros ($389.1 million). That compares with 213.4 million euros a year earlier and 270.1 million seen in a Reuters poll of eight analysts.
The Irish carrier, which has warned repeatedly that business during the European winter months will be tough, said it still expected ticket prices to drop in the six months to the end of March but that the fall in passenger yields would be at the lower end of the 5 to 10 percent range previously indicated.
As a result of these better winter yield forecasts and the costs savings which we continue to realise, we now believe that full year net profit will rise by 17.5 percent to approximately 470 million euros, the company said in a statement.
Ryanair in July forecast growth of 10 percent when the company raised its net profit growth goal from 5 percent.
Analysts widely expected the airline to improve guidance after strong summer sales were buoyed by its biggest-ever ticket sale and a lowest fare price promise to passengers.
The median of 15 forecasts on Reuters Estimates shows that even before Monday's results analysts expected a net profit rise in the year to the end of March 2008 of about 15 percent with four of them predicting a rise of closer to 20 percent.
Analysts said Ryanair's improved guidance could yet prove conservative with Bloxham's Ross McEvoy saying he saw considerable room for further upgrades.
In terms of the results themselves everything's more or less in line with expectations but forward bookings must be very strong if (Chief Executive Michael) O'Leary is confident enough to upgrade forecasts so early in the second half, McEvoy said.
Shares in the company were 4.5 percent lower at 5.49 euros by 0919 GMT, however, versus a 1.1 percent drop for the broader Irish market.
The shares have been trading well in recent days and there was just not enough to keep them going today, said one Dublin-based trader. The results were in line with what people were expecting and this is a bit of a sell-off.
The stock had risen 15 percent since the start of October, outperforming a 5 percent fall for the Irish stock market.
Traders also pointed to Ryanair's limited insurance against rising oil prices after the company said fuel hedging for its 2008/2009 business year remained at the 10 percent of third quarter fuel needs announced in September.
We would expect them (oil prices) to fall modestly, giving us the opportunity to hedge further between now and the end of our fiscal year, Deputy Chief Executive Michael Cawley told Reuters in a telephone interview.
Ryanair, which makes the bulk of its profits in its second quarter, which coincides with the busy European summer months, said revenues in the period just ended rose 25 percent to 861.3 million euros. Analysts had expected a rise to 847.6 million.
Ancillary revenues from non-core services jumped 54.3 percent to 135.3 million euros. Income from activities such as in-flight sales, hotel bookings and travel insurance are expected to be a major driver of future growth for the airline.
The company said it would test a new in-flight mobile phone service on 25 aircraft before the end of March 2008.
(Additional reporting by Jonathan Saul)