Michael O’Leary, Ryanair chief executive, wants to almost double profits to €2 billion a year over the next six to eight years as the budget airline aims to become the “Amazon for travel” in Europe.
The target comes after a bumper summer in which Ryanair increased full-year profit guidance this month by 25 per cent to a range of €1.18 billion - €1.23 billion.
While Ryanair is eyeing further growth across Europe as it focuses on countries such as Germany, it also plans to expand its website into travel and leisure services, such as hotels and concerts.
“We now have an opportunity with the new website to build Ryanair.com not just as the airline’s website but as a kind of Amazon for travel in Europe,” said Mr O’Leary.
“All the services will be available on Ryanair.com – hotels, TripAdvisor – we want to disintermediate all the disintermediators . . . We have the scale to do it.” Ancillaries were likely to stay about 20 to 25 per cent of total revenue, he said, but make a bigger contribution towards profitability in the future.
Business model
His comments come as the low-cost airline benefits from the launch of its “Always Getting Better” campaign two years ago in which it has tried to become “nicer” to passengers.
Following two profit warnings in 2013, Ryanair overhauled its business model, reduced or axed unpopular fees and allowed passengers to take an extra small item of carry-on baggage. It is also flying to more primary airports and its website has been upgraded to make it quicker and easier to book tickets.
Last week, the company revealed plans to return €400 million to shareholders, bringing the total funds returned by Ryanair to shareholders this year to €800 million – and more than €3.3 billion since 2008. The airline wants to increase the number of passengers it carries from about 100 million this year to 160 million over the next six to eight years. Over that period, it is targeting profits of €2 billion.
Perfect summer
Mr O’Leary ruled out the likelihood of Ryanair making any big acquisitions but said it could take minority stakes in rivals such as Lufthansa or Air France.
“The summer peak this year was extraordinary. In all the 28 years I’ve been in the business I’ve never seen such a perfect summer. Even the incompetent airlines made money,” he said, pointing towards the benefits of strong sterling, bad weather in northern Europe, recovering European economies and low fuel prices.
– (Copyright The Financial Times Limited 2015)
