Holiday traffic will aid Ryanair’s return to profit, O’Leary says

Holidaymakers will aid Ryanair’s return to profit this year, but chief executive Michael O’Leary has warned that the recovery is “too fragile” to make predictions.

The airline lost €355 million in the last financial year, which ended on March 31st, 65 per cent less than the €1.015 billion shortfall it suffered following pandemic lockdowns during the previous 12 months.

The carrier earned €4.8 billion in revenue from the 97.1 million passengers it flew over the 12 months, almost treble the €1.64 billion it generated in its previous financial year, during which Covid-19 mostly grounded air travel.

Mr O'Leary said Ryanair hoped to return to profitability this year. "This recovery, however, remains fragile," he warned.

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Speaking after the company published its financial results on Monday, the airline boss predicted that pent-up demand would push fares above pre-Covid levels during the peak summer months.

“Quarter-one traffic will be strong but fares are down on pre-Covid levels,” he said.

“In quarter two, at this point in time, we are looking at modest single-digit increases on pre-Covid levels.”

He believes that the strong second quarter will aid Ryanair in returning to profit in the current financial year, which ends on March 31st, 2023. However, he stressed that the airline remained "very cautious" after the Omicron wave of the virus hit Christmas bookings and Russia's invasion of Ukraine set back Easter bookings.

“There are a range of profitability outcomes,” he said. “It could be significantly north of €1 billion or it could be significantly south of €1 billion.” He argued that it was “impractical, if not impossible” to provide sensible or accurate profit guidance for the current financial year.

The company believes that Europe faces a possible recession this year as energy and other costs rise. Mr O'Leary maintained that this would be good for the carrier as people would continue flying, but switch to lower-cost airlines. He also noted that the 20 per cent of its fuel needs for this year that it has not hedged will result in some unbudgeted cost increases.

Ryanair has hedged 80 per cent of its fuel needs for the current financial year at less than $70 a-barrel.

The airline hopes to fly 165 million passengers over the current financial year, up from 149 million pre-Covid, Mr O’Leary said.

Average fare

Ryanair charged an average fare of €27 during the 2022 financial year while passengers spent €22 each on ancillaries, including priority boarding.

Operating costs rose 113 per cent to €5.27 billion, including a 237 per cent hike in its fuel bill to €1.83 billion. Mr O’Leary said Ryanair grew its share of the Irish market to more than 55 per cent from 49 per cent over the past two years.

The airline has taken a bigger slice of European air travel. It will have almost 40 per cent of the Italian market this summer, from around 30 per cent pre-Covid.

Similarly, Mr O'Leary said that it would increase its share out of Vienna this summer to 21 per cent from 8 per cent, and at Budapest, home to rival Wizz Air, to more than 30 per cent from 18 per cent.

The airline expects to have more than 70 Boeing 737-8200 aircraft, formerly know as the Max, delivered this summer.

Mr O'Leary criticised Boeing for ongoing delays in delivering jets that he argued were produced two years ago and that management at the company's manufacturing base in Seattle needed "a reboot, or a boot up the a***".

Ryanair’s net debt was €1.45 billion on March 31st. It plans to cut this to zero over two years.

Chief financial officer Neil Sorahan said capital spending would hit €2.3 billion this financial year and €2.1 billion to €2.2 billion over the following 12 months.