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Ryanair expects that aircraft delivery delays will affect the number of passengers carried for the full financial year 2024 by 1.5 million compared to the original target. The airline counts on carrying 183.5 million passengers in FY24 now compared to the previously planned 185 million, it said on July 24 in its Q1 FY24 release. The shortfall is slightly higher compared to what Ryanair said in May when it anticipated it to be one million passengers. Aircraft delays cost Ryanair 1.5 million passengers in FY24.
Delivery delays caused by the tailfin fitting issues on the Boeing MAX already affected the planned capacity in the airline’s first quarter, which runs from May to June. This coincided with Boeing needing extra time for inspections and repairs of the aircraft that were either in production or awaiting delivery.
Boeing is three months late on deliveries to Ryanair. The airline took delivery of 21 MAX 8200s in its Q1, bringing the fleet to 119 aircraft by the end of June. In July, five ‘Gamechangers’ were supposed to be delivered to grow the fleet to 124. Until the closing of FY24 in March 2024, the carrier counts on 51 deliveries to bring the fleet to 173 aircraft. However, it has indications that two deliveries will slip from April to May or June 2024 and affect capacity for the 2024 summer period, which is Ryanair’s Q1/Q2 FY25.
Adding to the well-known supply chain issues that affect Boeing and the tailfin issues, another issue could hurt deliveries of 86 deliveries that are scheduled for summer 2024 and summer 2025. The collapse of a railway bridge over the Yellowstone River (Montana) has severed a lifeline of Boeing’s 737/MAX fuselage supplies going into Renton, forcing the airframer to use trucks to carry them by road and then load them on train cars again. Ryanair said it is unable to quantify the effect this will have on deliveries in HY2 of FY24.
With the first of 150 MAX 10s (plus 150 options) that were ordered in May not coming until 2027, these aircraft deliveries are unaffected by the current issues. Including MAX 8200 and MAX 10 deposits, Ryanair expects capital expenditures of €2.8 billion in FY24 and €1.3 billion in FY25.
Strong Q1 profit
Ryanair reported a strong Q1 net profit of €662.9 million compared to €170 million in April-June 2022. Michael O’Leary attributed the result to Easter and a second bank holiday in May for the coronation of King Charles falling into its Q1. He noted that last year’s Q1 had been very weak and heavily distorted by the effects of the war in Ukraine. The parent airline and subsidiaries Buzz, Malta Air, and Lauda carried 50.4 million passengers versus 45.5 million last year. The load factor increased by three percentage points to 95 percent.
Total revenues were €3.649 billion, up from €2.601 billion. Ticket revenues grew to €2.474 billion from €1.576 billion and ancillary revenues to €1.176 billion from €1.025 billion. Per passenger, revenues were up by 27 percent thanks to fares that were up 42 percent to €49.
Operating expenses increased by 23 percent to €2.938 billion, primarily due to 30 percent higher fuel costs at €1.338 billion. Staffing costs were up 31 percent to €360 million, reflecting the restoration of pay cuts, pay increases, and higher crewing ratios as Ryanair invested in more operational resilience. It doubled operations centers in Dublin and Warsaw. Excluding fuel, unit costs ended at €31, which according to Ryanair is well ahead of its next competitor Wizz Air at €47.
The operating profit was €711.2 million, up from €219.6 million in Q1 last year. Ryanair ended June with €980 million in net cash and €4.8 billion in gross cash. In August, the carrier will repay a second €750 million bond, using internal cash resources. Debt will be fully repaid over the next three years.
Operations were significantly affected by French ATC strikes, which add up to sixty days since January. O’Leary once again called on the European Commission to act and protect overflying flights of France during strikes instead of forcing airlines to cancel or reroute flights. A petition that was signed by 1.1 million customers was presented to the EC in May, but nothing seems to have happened since then to improve the situation.
Q2 bookings are good but a little softer
In its outlook, Ryanair expects Q2 traffic to be up by another eleven percent, but O’Leary warned that fares will be notably weaker compared to the very strong same quarter of last year. “Because of price stimulation, we had a very strong snap-up in Q2 last year. Because we had a very strong Q2, our performance this Q2 will not be as strong as it was in Q1. We expect fares to be above the prior year but at a low double-digit figure.”
Q2 bookings have been strong but are a little bit softer in the past weeks, so the outcome of HY1 will depend on bookings in August and September. Ryanair and its subsidiaries will carry 3.200 flights and almost 600.000 passengers every day this summer, its largest-ever summer schedule. It opened three new bases in Tenerife, Lanzarote, and Belfast and added 190 new routes. This brings summer capacity to 125 percent of 2019 levels.
Continued high inflation might affect bookings in HY2 and may require more price stimulation through lowering fares. Together with higher fuel costs, this gives Ryanair almost no visibility for the second half of the year, although O’Leary is cautiously optimistic that profit after tax will be around the €1.4 billion level of FY23. The airline has hedged fuel costs for FY24 at 83 percent and at 27 percent for FY25.
