Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Ryanair hails 'very strong' recovery with record summer profit

Published 07/11/2022, 06:01
Updated 07/11/2022, 13:37
© Reuters. FILE PHOTO: General view of the Ryanair logo at their headquarters in Dublin, Ireland, September 16, 2021. REUTERS/Clodagh Kilcoyne

© Reuters. FILE PHOTO: General view of the Ryanair logo at their headquarters in Dublin, Ireland, September 16, 2021. REUTERS/Clodagh Kilcoyne

By Conor Humphries

DUBLIN (Reuters) - Ryanair (LON:RYA) on Monday posted its largest ever profit for its key summer season and said it expected very strong passenger and fare growth for years to come as customers switch from higher-cost rivals.

But it also warned Europe's recovery remained susceptible to shocks from COVID-19 and Russia's invasion of Ukraine, and said aircraft delivery delays from Boeing (NYSE:BA) could hit its capacity next summer.

Ryanair shares were up by 5.5% at 1205 GMT.

The Irish airline, Europe's largest by passenger numbers, earned 1.371 billion euros ($1.36 billion) in the six months to the end of September, the first half of its financial year.

While that was just short of a forecast of 1.385 billion in a company poll of analysts, it was well ahead of its previous first-half record of 1.29 billion euros in 2017.

GRAPHIC - Ryanair's record first half performance

https://graphics.reuters.com/RYANAIR-RESULTS/zjvqjqlbqpx/chart.png

"Concerns about the impact of recession and rising consumer price inflation on Ryanair’s business model have been greatly exaggerated," Chief Executive Michael O'Leary said.

"We expect these strong fundamentals will continue to underpin robust traffic and average fare growth for the next 18-months at least," he said, pointing to a possible influx of U.S. and Asian passengers to Europe next summer.

Profit and traffic are poised for "very strong growth" until 2025 assuming oil prices remain relatively stable, O'Leary added in a video presentation.

A loss-making winter, during which Ryanair hopes to boost traffic 10% above pre-COVID levels, is likely to leave the airline with an after-tax profit of between 1 billion and 1.2 billion euros for the year to March 31, he said.

O'Leary said the July-September quarter had delivered growth on a scale he had never seen, with 15% traffic growth combined with a fare rise of 14% thanks to the combination of pent-up demand and the post-COVID retrenchment of rivals.

While bookings in November and December remain strong, O'Leary said it was reasonable to expect single-digit percentage growth in average fares for the full-year to the end of March and a similar result next summer.

Several rivals have provided upbeat guidance in recent weeks with Wizz Air (LON:WIZZ), British Airways-owner IAG (LON:ICAG) and Lufthansa all saying they were seeing continued strength in ticket sales despite inflation fears.

O'Leary said a wave of consolidation in the coming years was likely to leave Ryanair as the only major low-cost carrier in Europe as no one could compete with its average cost per passenger, which is under 30 euros now, excluding fuel, and is only likely to grow 10% in the coming three or four years.

Low-cost rivals easyJet (LON:EZJ) and Wizz have repeatedly rejected suggestions by O'Leary that they will struggle to compete.

"Europe is inexorably moving towards a similar out-turn as North America where you will have three very large, somewhat higher cost high-fare connecting carriers, and one very large low cost carrier" in Ryanair, O'Leary said.

Ryanair plans to grow from a record 168 million passengers this financial year to 185 million next.

However, while the airline is planning for the delivery of 51 737 MAX aircraft by next summer, O'Leary said he was concerned Boeing might fall 5-10 aircraft short, knocking 1 or 2 million from that target.

© Reuters. FILE PHOTO: General view of the Ryanair logo at their headquarters in Dublin, Ireland, September 16, 2021. REUTERS/Clodagh Kilcoyne

O'Leary said he favoured maintaining a fuel hedging position of around 50% next year as anything higher might leave the airline exposed if prices fall.

($1 = 1.0053 euros)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.