DAVY VIEW

With its H1 results, Ryanair has announced a further share buyback programme of up to €550m over the four-month period from November 2016 to February 2017 (this results in >€1bn for FY 2017 and almost €4.8bn in total). In addition, the longer-term traffic growth forecast has been raised by over 10% from 180m to over 200m customers a year by FY 2024. The airline has also raised its medium-term guidance for ancillary sales from 20% to 30% of revenues over the next four years to FY 2020. H1 profit after tax, at €1,168m, was modestly ahead of consensus at €1,150m and Davy at €1,147m, driven by a strong Q2 cost performance. Recently revised FY 2017 net income guidance of €1.3-1.35bn has been maintained. We are likely to retain our FY 2017 forecast of €1.325bn but will up our FY 2018 forecast (currently €1.385bn) by c.5%, factoring in better cost performance and strong traffic momentum. We maintain our ‘Outperform’ rating and €16 price target.