Ryanair lifts profit forecast as better service pays off

Mon Nov 3, 2014 7:52am EST
 
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By Conor Humphries

DUBLIN (Reuters) - Ryanair (RYA.I: Quote) raised its annual profit forecast almost 20 percent on Monday thanks to a surge in winter bookings as the budget airline pioneer said improvements to its much criticized customer service were paying off.

The Irish airline built its business on the back of low fares combined with austere service but shifted strategy when it became apparent that its growth had stalled as customers were tiring of its charmless approach.

Since a pledge last year by outspoken Chief Executive Michael O'Leary to stop "unnecessarily pissing people off," Ryanair has slashed penalty charges, overhauled its web site, tripled its marketing budget and launched business class fares.

That has helped the airline to boost ticket fares by 5 percent in the six months to September and is set to help it sell 2 million more seats than originally planned in the six months to March, O'Leary said.

"As the word gets out that Ryanair is changing, that it's not cheap and nasty ... that gives us a lot of positive momentum," O'Leary told a conference call with investors.

"If I had known being nice to customers would work so well I would have started many years ago," joked O'Leary, who is rationing his media appearances after being closely identified with the airline's spartan style.

The improved focus on service by Ryanair and budget rival easyJet (EZJ.L: Quote) has increased the pressure on higher cost European airlines Lufthansa (LHAG.DE: Quote) and Air France-KLM (AIRF.PA: Quote).

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Ryanair planes are seen parked at Girona airport, September 20, 2012.  REUTERS/ Albert Gea