Ryanair (RYA.L) on Friday said that full-year profits would come in higher than expected, largely due to a bumper Christmas and New Year period and strong forward bookings.
In an unscheduled trading update, the low-cost airline said that it had more “close-in” bookings than it expected, meaning that customers chose to book closer to the time of departure. It also said that yields were better than expected.
Forward bookings for the January to April period are also 1% ahead of this time in 2019, Ryanair said.
The company said that it therefore thought it was “appropriate” to raise its full-year guidance, with after-tax profits now expected to come in between €950m (£808m, $1.05bn) and €1.05bn.
Ryanair had previously guided a range of between €800m and €900m.
Even then, it warned that Laudamotion, its Austrian subsidiary, “continues to underperform”.
It said average fares over the Christmas period were lower than expected, despite “strong” traffic growth and high load factors.
Ryanair said this was a “direct result of intense competition with Lufthansa subsidiaries in both Germany and Austria who are engaged in below-cost selling”.
While the airline said that Laudamotion would carry 6.5 million passengers in the year to the end of March 2020, average fares would be €15 below budget.
The subsidiary will therefore lose around €90m, up from €80m, Ryanair said.
Shares in Ryanair climbed by more than 7% on Friday following the trading update.
Ryanair CEO Michael O’Leary has long warned that European airlines will not be able to engage in below-cost selling for much longer, and has predicted that Ryanair would benefit from “a wave of EU airline failures”.
Ryanair competitors, he has previously noted, have been “losing money heroically” even as they battle rising costs and overcapacity in the airline market.
In May, he said that both Norwegian Airlines and Thomas Cook were “two obvious ones hanging on by their fingernails”.
Thomas Cook collapsed in September, primarily because of a mounting £1.7bn debt pile and a weak bookings market.