Ryanair is cutting fares to stoke demand as uncertainty and fears of fuel shortages prompt holidaymakers to delay booking flights, according to chief executive Michael O’Leary.
Europe’s biggest airline said on Monday that profits had risen 40 per cent to a record €2.26 billion in its last financial year, which ended on March 31st, from €1.61 billion in the previous 12 months.
Ticket prices had “eased somewhat in recent weeks” in response to economic uncertainty sparked by rising oil prices, jet fuel price shortage fears and the impact of inflation, O’Leary said.
Holidaymakers were a little bit more hesitant than usual about booking later into the summer, he told analysts.
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“We’re having to do a little bit of discounting to keep the demand curve going,” he said.
Despite their caution, O’Leary said he believed people would still travel. “We think that they will go on holidays, and they will go on holidays in Europe,” he said.
Chief financial officer Neil Sorahan noted the airline had 1.7 million bookings over the weekend. “There’s no shortage people wanting to get out and about,” he said.
Ryanair has ordered 80 per cent of its fuel needs for the current financial year in advance at $67 a barrel, insulating it against current volatility, he said.
Despite the continued choke on the Strait of Hormuz, Europe remained relatively well-supplied with jet fuel with “volumes sourced from west Africa, the Americas and Norway”, Ryanair said.
Sorahan said the airline would wait to until later in the year, when hopefully the conflict in the Middle East will have been resolved, to begin hedging fuel for summer 2027.
In the meantime, Ryanair had begun hedging the dollars it would need to to pay for the fuel, he added.
Ryanair revenues rose 11 per cent in the 12 months to the end of March to €15.45 billion as passenger numbers climbed 4 per cent to 208.4 million from 200 million.
The airline expects similar growth in traffic in this financial year.
Ryanair took delivery of the last 29 of 210 Boeing 737 “gamechanger” aircraft on time for this summer.
Boeing is on schedule to begin delivering the first 15 of the 737 Max 10 in January next year.
O’Leary noted US and EU air travel safety regulators had to certify this aircraft, but added that both had been positive about their engagement with Boeing to date.
Ryanair’s board proposes giving O’Leary the option to buy 10 million shares at the price at which they traded before the outbreak of Middle East hostilities, if he remains employed until April 2032.
“These options will only be exercisable if ambitious profit after tax or share price growth targets are achieved,” said O’Leary.
He stressed that those targets would be “very aggressive” and pointed out that his previous contract with the company required profits to “almost double” before he could exercise options.
“I am paid a modest salary and bonus and no pension or anything else,” he said.
The board will shortly begin talks with major shareholders on the plan.
The company proposes paying investors a final dividend of 19.5 cent a share.
O’Leary said the current volatility meant it was too early to give shareholders meaningful guidance about profit for the current financial year.
The outcome “remains heavily exposed to adverse external developments including conflict escalation in the Middle East and Ukraine”, he pointed out.
Sorahan confirmed that the group was on track to repay a €1.2 billion bond next week, which would leave it debt free.
He added it was unlikely Ryanair would return to debt markets in the near future as “the numbers just don’t make sense”.
The company will cover capital spending from its own resources, he said.
