Outlook for Ryanair looks promising despite large losses

Airline targeting ‘north of €1 billion profit’ this year

Ryanair has narrowed its forecast full-year loss to between €350 million and €400 million from the €250 million to €450 million it predicted in December.

Given that its 2022 financial year ended on March 31st, the airline has a much clearer picture of how its financial results will look than it did in December, when Covid’s Omicron strain briefly threw air travel into chaos.

Ryanair cautioned then that the virus’s progress would influence the final outcome for the year. Consequently, its statement had to take any number of likely scenarios into account.

Its shares added close to 1 per cent to close at €13.66 on Monday. Investors have already factored in the likely losses for the year, so the trading statement will not have spooked them.

Ryanair also said it flew 11.2 million people in March. As neither last year nor 2020 – when Covid first struck – give any sort of realistic comparison, you have to go back to March 2019 for a proper benchmark.

Recovering ground

Ryanair flew 10.9 million people during that month. So 11.2 million passengers could show that real growth, as opposed to recovering ground lost to the pandemic, is on the way. Last month the airline sold 87 per cent of the seats available on its planes. As this would normally be above 90 per cent, that indicates more scope to expand.

Last week its chief executive Michael O'Leary told Bloomberg that Ryanair would be disappointed if it did not do "north of €1 billion profit" in the financial year that has just begun. It could fly a record 165 million passengers over that 12-month period.

Ryanair’s fuel is 80 per cent hedged for the year, so those predictions hinge on how many people want to travel between now and the end of next March. Quite a lot it would seem.

Stephen Furlong, an analyst with stockbroker Davy, says that a fall in net debt to €1.5 billion from €2.1 billion on December 31st indicates that bookings are strong. He also believes that Ryanair is likely to sell more than 90 per cent of the seats on its aircraft from this point on. Presuming there are no more Covid-19 lockdowns, its future prospects look promising.