Ryanair Holdings PLC said Monday it will introduce discounts for
frequently flying families this year and offer business passengers
fast-track airport services as the budget airline's boss Michael
O'Leary further adapts his bare-bones business model. The Irish
airline reported an 8% drop in net profit in the year to
end-March.
From this fall, business passengers will be able to buy
premium-priced tickets that allow some changes in flights, provide
allocated seating and, where available, have access to fast-track
services at airports, Ryanair Chief Financial Officer Howard Millar
said.
Starting in June, families traveling with at least two children
will get discounts with families who clock up lots of miles flying
Ryanair also entitled to discounts on future tickets.
The product changes are the latest in a series of actions
Ryanair has taken to shift its once single-minded focus on low
fares to a more flexible approach after warning last year that
profit would fall short of expectations.
To help win bookings in the face of stiff competition from
rivals such as easyJet PLC, Ryanair has eased some baggage charges
that particularly irked passengers. It also started to accept
American Express credit card payments to attract business customers
and updated its website to make it more easy to use. The carrier
also began an advertising push in key markets.
Ryanair said net profit fell to EUR522.8 million ($716 million)
in the year to March 31 from EUR569.3 million a year earlier.
Europe's largest discount carrier had warned last November
profit would come in short of earlier plans at EUR500 million to
EUR520 million as it cut prices to compete more aggressively with
rival discount carriers and the short-haul operations of airlines
such as Deutsche Lufthansa and International Consolidated Airlines
Group, a move that surprised investors.
Mr. O'Leary called the drop in profit "disappointing," though
actions taken since September were underpinning growth in Ryanair's
passenger traffic.
Profit should rebound this year to EUR580 million to EUR620
million, though the airline said it is hard to predict the outlook
for this winter a period in which it typically it incurs losses.
Fares are expected to rise 4% in the current year.
"Forward bookings for [this summer] are significantly ahead of
last year, " Mr. O'Leary said. Still, the airline will spend EUR35
million on advertising this year, EUR25 million more than last
year.
Ryanair said traffic, which rose to 81.7 million passengers last
year, should rise to 84.6 million as the airline expects to park
fewer airlines this winter.
The airline is idling fewer jets to "invest in the network"
ahead of the busier spring season, Mr. Millar said.
Ryanair faces intense competition this summer, a period that is
crucial for low-cost carriers' profits as Europeans head off on
holidays, with rivals including easyJet adding capacity in key
markets.
EasyJet said Tuesday it would increase its capacity
significantly in the summer. The U.K. airline's chief executive
Carolyn McCall said she would be willing to let yields fall to win
business.
"We always love a good old fare war," Ryanair's Mr. Millar
said.
Write to Robert Wall at robert.wall@wsj.com
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