Rebound in travel lifts Ryanair profits
Ryanair has returned to profit for the first time since before the pandemic on the back of rising passenger numbers and fares.
The budget airline behemoth reported an underlying net profit of €1.43 billion in the year to the end of March, compared with a loss of €355 million a year earlier.
Revenues more than doubled to €10.78 billion as customer numbers rebounded to a record 168.6 million, up from 97.1 million a year earlier, while average fares were 50 per cent higher at €41.
Europe’s biggest airline group said it was “cautiously optimistic” about delivering a further, modest, increase in profits this financial year. It said a projected 10 per cent rise in passenger numbers should more than offset a €1 billion increase in fuel costs. However, delays in deliveries of Boeing aircraft could dampen growth.
Michael O’Leary, chief executive, said Ryanair expected to expand its market share because airline capacity in Europe remained constrained below pre-Covid levels but demand was “significantly stronger”.
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“People who have been locked up for two and a half years are going back travelling,” he said. Despite fears about rising energy costs, inflation and interest rates, people were spending money on travel that was “no longer a luxury. It appears to be kind of a necessity.”
O’Leary also predicted that the strength of the dollar would result in “an invasion of Americans across Europe all summer long”.
Ryanair is the world’s biggest international airline and operates 537 aircraft under the Ryanair, Buzz, Lauda and Malta Air brands. It flies to more than 240 destinations in more than 40 countries.
The group has recovered more strongly from the pandemic than many of its rivals after cutting fewer staff.
In the past year Ryanair benefited from its hedging strategy, which insulated it from soaring oil prices, having locked in more than 80 per cent of its fuel needs at about $64 per barrel; this year, however, it has hedged 85 per cent of its fuel needs at $89 per barrel.
O’Leary said the group retained an “enormous cost advantage” over its rivals, in part due to lower aircraft ownership costs while many of its rivals were leasing their aircraft and exposed to higher financing costs.
Ryanair has ordered 300 Boeing Max-10 aircraft that it hopes will enable it to increase customers to 300 million a year by 2034. It said this would entrench its cost advantage with more seats per jet and greater fuel efficiency.
O’Leary, 62, has led Ryanair since 1994 and late last year extended his contract until 2028. He claimed that it was “frankly immaterial” whether the board wanted him to extend his contract even longer. “This business is no longer heavily dependent on me. With the early days I used to make all the decisions in Ryanair and increasingly I make very few of the decisions in Ryanair because it’s such a big operation,” he told analysts.
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O’Leary became group chief executive in 2019 and said that the company had “done a lot of really good work during Covid and post Covid on succession planning”, with management roles in each airline in the group serving as a “training ground”.
