Ryanair narrows full-year guidance following travel agent sales stoppage

Investing.com -- Ryanair (IR:RYA) has narrowed its full-year profit guidance and posted lower-than-anticipated net income in its December quarter, as the budget carrier felt the near-term impact of an ongoing battle with online travel agents.

A number of these firms, which offer customers the chance to purchase Ryanair offerings through third-party websites, stopped selling the budget carrier's flights in early December. Ryanair had long been fighting this activity in court, arguing that these companies, including websites like Booking.com and eDreams, are "unlawfully" scrapping data off its website and reselling its services at higher prices.

Although Ryanair welcomed the halts, it flagged in a statement on Monday that the moves had forced it to roll out deeper discounts to stimulate demand and maintain load factors in December and January.

Ryanair subsequently lowered the top-end of its target range for post-tax profit in its 2024 fiscal year to €1.85 billion to €1.95 billion, down from its prior estimate of €1.85 billion to €2.05 billion.

However, analysts at AllianceBernstein (NYSE:AB) noted that the impact of the sales halt by the online travel agents amounts to "a one-time event," adding that it is not expected to have "lasting effects" on Ryanair's top-line returns.

"Medium-term -- in fact, by spring -- we expect this to benefit Ryanair, not least through an enhanced ability to sell ancillaries to its customers," the AllianceBernstein analysts said in a note to clients.

In the three months ended on Dec. 31, profit before tax slipped by 93% compared to the corresponding period in the prior year to €15 million, far below consensus esitmates of €49 million, while load factors -- a measure of the percentage of available seats filled by passengers -- dipped by 1 percentage point to 92%.

Meanwhile, Chief Executive Michael O’Leary backed plans to expand passenger growth to 300 million per year in the next decade and said he does not expect the recent grounding of Boeing's (NYSE:BA) 737 Max 9 jet to lead to issues with Ryanair's fleet of related Max 8 planes.