On February 5, 2018, Ryanair reported a 12% rise in Q3 profit to €106m as average fares fell 4% to just €32 per customer. Traffic grew 6% to 30.4m with load factors up 1% to 96%. Unit costs fell 1% (ex-fuel unit costs rose 3%).

Q3 Results (IFRS)Dec. 31, 2016Dec. 31, 2017% Change
Customers (m)28.830.4+6%
Revenue (m)€1,345€1,405+4%
Profit after Tax (m)€95€106+12%
Net Margin7%8%+1pt
Basic EPS€0.0760€0.0893+17%

We are pleased to report this 12% increase in profits during a very challenging Q3. Following our pilot rostering failure in September, the painful decision to ground 25 aircraft ensured that punctuality of our operations quickly returned to our normal 90% average,” said Michael O’Leary, Ryanair’s CEO, in an official statement.

Ryanair’s AGB customer service program, coupled with 4% lower fares, stimulated 6% traffic growth to 30.4m at an industry leading 96% load factor.

According to O’Leary, in December 2017 it became clear that a majority of Ryanair pilots wanted to be represented by unions. The airline has met pilot unions in Ireland, UK, Spain, Germany, Italy, Portugal, Belgium and France to discuss how to work with them on behalf of Ryanair’s people.

The airline has successfully concluded its first recognition agreement with BALPA in the UK, a market which accounts for over 25% of its pilots. When this process has completed, the carrier expects to have similar engagement with cabin crew unions.

O’Leary says that while union recognition may add some complexity to Ryanair’s business and may cause short-term disruptions it will not alter the carrier’s cost leadership in European aviation, or change its plan to grow to 200m traffic p.a. by March 2024.

In Q3 Ryanair took delivery of 9 new B737-800’s. In November 2017 the airline opened a base in Poznan (Poland) and in March 2018 the 87th base in Burgas (Bulgaria) is going to be opened.

The Irish low-cost carrier has recently announced flights to Jordan, their 34th country. Ryanair’s flight connections service was extended in January 2018 to Porto following their initial success at Rome Fiumicino and Milan Bergamo.

In Q3 unit costs fell 1%. Ex-fuel, unit costs increased by 3% primarily due to higher staff and EU261 costs arising from the September 2017 rostering failure and Ryanair’s decision to cancel flights in September and October last year.

Staff costs will rise in 2018 by an additional €45m as Ryanair rolls out pilot pay increases of up to 20% and raises its crewing ratios in response to a tightening market for experienced pilots. Staff costs accounted for 10% of total revenue in 2017.

Ryanair is also going to take delivery of 210 B737-MAX-200 aircraft from April 2019. The airline’s capex on the MAX-200 is hedged at an average rate of $1.24.

The airline recently concluded a 10-year maintenance contract with CFM for its B737-800 engines which will deliver substantial annual savings, as will its recent 7 simulator order with CAE, which will double the pilot training capacity over the next 3 years.

Q4 fuel is 90% hedged at approx. $49bbl and FY19 is 70% hedged at just over $55bbl, well below current spot prices of c.$70bbl.

Ryanair’s balance sheet remains strong having generated over €1bn net cash from operating activities year-to-date. In the first 9 months of FY18 the airline has spent €1bn on capex, €639m on share buybacks and repaid over €300m of debt.

The Board has approved a €750m share buyback of ordinary shares which will start in February 2018 and, subject to market conditions, should be completed by the end of October 2018. This latest buyback will increase the funds returned to shareholders since 2008 to over €6bn.