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Ryanair cautious about 'fragile' recovery, berates Boeing

Stock Markets May 17, 2022 00:20
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© Reuters. FILE PHOTO: Ryanair aircraft are seen at at dawn at Dublin airport Dublin, Ireland March 20, 2018. REUTERS/Clodagh Kilcoyne

By Padraic Halpin and Conor Humphries

DUBLIN (Reuters) -Ryanair said on Monday it was impossible to give detailed 2022 guidance beyond hoping for a return to "reasonable profitability" amid uncertainties over COVID-19 and the Ukraine war, knocking its shares despite a smaller annual loss.

Europe's largest airline by passenger numbers also became the latest Boeing (NYSE:BA) customer to criticise the planemaker. Chief Executive Michael O'Leary said its management needed to step up and deliver aircraft more quickly or make way for a new team.

Ryanair (LON:RYA) posted a 355 million euro ($369 million) loss for the pandemic-scarred 12 months to March 31 and said it planned to grow traffic to 165 million passengers this year, from 97 million a year ago and a pre-COVID-19 record of 149 million.

However, O'Leary said it was "impractical, if not impossible" to provide a sensible or accurate target until the second half of its fiscal year.

He added that while bookings had improved in recent weeks, he was a little concerned that competitors were talking up the summer recovery too much and that caution was needed heading into a winter with an expected economic downturn.

"It's too fragile, there remains too many moving parts," O'Leary said, adding that Ryanair would nevertheless thrive if any of its markets dip into recession due to its lower cost base.

Chief Financial Officer Neil Sorahan told Reuters that fares were lower in recent weeks than anticipated. While cautiously optimistic that peak summer fares will be "somewhat ahead" of pre-pandemic levels, O'Leary said it was impossible to predict winter pricing.

Customers were also still waiting until much closer than usual to the time of their trips to book.

Ryanair shares ended down 0.2%.

BOEING CRITICISM

O'Leary also said that while Ryanair remained a willing Boeing customer and hoped to receive more 737-8200 jets than planned over the next two summers, it could turn to the second-hand leasing market to fuel further growth unless Boeing stepped up with some additional orders.

Ryanair has issued a market tender for 50 jets, industry sources say.

Ryanair last year walked away from negotiations with Boeing for 200 of its largest single-aisle aircraft: the upcoming 737 MAX 10.

O'Leary described Boeing management on Monday as "running around like headless chickens" and said "they need to bloody well improve".

"Boeing need a management reboot in Seattle and either the existing management needs to up its game or they need to change the existing management," O'Leary told analysts.

Boeing declined comment.

O'Leary has persistently lashed out at Boeing over the past year in what many industry executives viewed as a tactic in deadlocked MAX purchase negotiations.

But his latest comments coincided with broader pressure on Boeing after two leasing industry leaders, Air Lease Corp Executive Chairman Steven Udvar-Hazy and Avolon CEO Domhnal Slattery, questioned its leadership.

By contrast, the head of the world's largest lessor, AerCap boss Aengus Kelly, last week threw his weight behind Boeing and said it would overcome recent problems.

Boeing shares fell 2.5%.

At the end of April, Boeing expressed doubts over hitting jet delivery targets as technical problems, inflation and supplier risks clouded its recovery.

Boeing Chief Executive Officer Dave Calhoun said at the time: "We're going to deliver great airplanes. And we're going to recognize the costs associated with it."

O'Leary said Ryanair, which has hedged 80% of its 2023 fuel needs and 10% for 2024, would likely be profitable in the coming year, even if the outlook was worse than anticipated but that it would be significantly behind pre-pandemic levels.

($1 = 0.9619 euros)

Ryanair cautious about 'fragile' recovery, berates Boeing
 

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