Ryanair achieved close to record full-year profit in the year to 31 March and is cautiously optimistic that robust summer demand will ensure modest profit growth in the next 12 months despite fuel costs being less "fortuitously" hedged.
Details
Europe's largest airline by passenger numbers expects 10% traffic growth this year to more than offset a €1 billion rise in its oil bill, it said on Monday 22 May as it posted slightly better than expected annual post-tax earnings of €1.43 billion.
Ryanair said it stands to gain more from peak summer fares "trending ahead of last year", with summer European short-haul capacity set to be 5-10% below pre-pandemic levels.
"There is no doubt in my mind that people who have been locked up for the two years of COVID are going back traveling. They see travel not as a luxury but as an essential and families are returning to the beaches of Europe this summer," chief executive Michael O'Leary said in a presentation to investors.
Other major European airlines, most recently low-cost rival EasyJet, have all pointed to robust summer bookings, showing consumers prioritising travel despite incomes being squeezed by higher inflation.
Ryanair shares, up 27% so far this year, were 1.4% higher in early trade on Monday 22 May.
O'Leary cautioned that he was not entirely sure if that would continue and that winter and early 2024 may be more challenging.
However, he added that a large backlog of aircraft deliveries is likely to constrain European capacity growth for at least four more years and create "enormous growth opportunities" for Ryanair as it adds 110 new Boeing jets over the next three summers.
Boeing delivery delays could push some of its expected growth into the lower yielding second half of this year and require capacity to be trimmed judiciously, he said, with the carrier expecting to be short of up to 10 new jets in June and July.
Finance chief Neil Sorahan told Reuters that the Irish airline remained comfortable it would increase passenger numbers to 185 million from a record 168.6 million in the past financial year.
The delivery delays could potentially reduce first-half passenger numbers by 750,000, he said.
O'Leary expects all the aircraft needed for summer 2024 to arrive by the end of next May and that deliveries will be "smoother" next summer.
A multibillion-dollar deal struck with Boeing this month for as many as 300 jets will allow traffic to grow to 300 million passengers a year by March 2034, Ryanair has predicted.
Ryanair's €1.43 billion full-year post-tax profit was slightly better than analyst expectations and its own forecast of €1.425 billion.
Additional Information
The company made a loss of €355 million in last year's pandemic-hit financial year but its turnaround came close to topping the record €1.45 billion profit achieved in the year to 31 March 2018.
The above news was followed by the following update:
UPDATE 2-Ryanair Aims For 10% Full Year Profit Growth On Strong Summer
Ryanair aims to boost profit by 10% this year after almost record earnings for its last financial year, CEO Michael O'Leary said on Monday 22 May, and it may do better if rival airlines' "irrationally exuberant" summer fare forecasts are right.
Europe's largest airline by passenger numbers said it expects 10% traffic growth this year to more than offset a €1 billion fuel bill rise as it posted slightly better than expected post-tax profit of €1.43 billion.
O'Leary said robust demand showed customers were treating travel as essential this summer and that fares would grow by a double digit percentage. However, he was not sure if they would hit the 20% to 30% range competitors are forecasting.
"If traffic is growing by 10%, we aim to deliver that type of profit growth as well. It could be better than that if our competitors are correct," O'Leary said on an analyst call.
"30 years of pain in this industry has taught me to be cautious when my competitors are irrationally exuberant."
Ryanair shares, up 27% so far this year, were 2.5% higher by 1145 GMT on Monday 22 May.
The low cost carrier stands to gain more from rising fares due to plans to operate 25% more flights than pre-COVID levels in the peak summer months when European short-haul capacity is set to be 5-10% below pre-pandemic levels.
O'Leary cautioned that he was not entirely sure if demand would remain strong with consumer spending strained and that winter and early 2024 may be more challenging.
However, a large backlog of aircraft deliveries is likely to constrain European capacity growth for at least four more years and create "enormous growth opportunities" for Ryanair as it adds 110 new Boeing jets over the next three summers.
Boeing delivery delays could push some of its growth into the lower yielding second half of this year and require capacity to be trimmed judiciously, he said, with the carrier expecting to be short of up to 10 new jets in June and July.
Finance chief Neil Sorahan told Reuters that the Irish airline remained comfortable it would increase passenger numbers to 185 million from a record 168.6 million in the past financial year.
The delivery delays could potentially reduce first-half passenger numbers by 750,000, he said.
O'Leary expects all the aircraft needed for summer 2024 to arrive by the end of next May or early June and that deliveries will be "smoother" next summer.
Ryanair's full-year post-tax profit beat the €1.4 billion analysts expected, as well as its own forecasts and almost topped the record €1.45 billion achieved in 2018. It said a large chunk was due to being "fortuitously" hedged on fuel cost.
The company made a loss of €355 million in last year's pandemic-hit financial year but its turnaround.
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