Ryanair expects to break even in FY22 or at least generate only a small loss. Good forward bookings are an indication that recovery of air travel in Europe is on its way. However, it will be essential that eighty percent of the European population will have got at least one dose of vaccination by the end of July, and no new virus mutations spring up. When travel restrictions are lifted, Ryanair expects a strong second half of the year and total passengers carried could reach 80-100 million or maybe even 120 million again. But that depends partly on getting the first Boeing 8200…

The Irish low-cost carrier reported an €815 million loss for FY21 (March-March) compared to a €1.002 billion profit in the previous year. Ryanair’s share in this loss is €614.6 million, Malta Air €18.7 million, and that of the other Buzz Air and Lauda €155.1 million.
Total revenues dropped 81 percent to €1.635 billion but ancillary revenues per passenger were higher to on average €22 as more travelers opted for pre-booked seats and priority boarding. The number of passengers carried dropped by 81 percent to 27.5 million, a far cry from the 148.6 million or even higher that made Ryanair Europe’s biggest airline in the last few years. The grounding between March and June last year and subsequent new lockdowns significantly hurt the carrier.

Operating costs reduced by 66 percent

Already known for its low-cost base, Ryanair further cut operational costs by 66 percent last year to €2.48 billion. Management costs were slashed significantly, including the cancelation of bonuses, while ‘modest’ pay cuts of five to twenty percent were imposed on staff and management. This way and thanks to furlough schemes, all pilots and 99 percent of the cabin crew remained current even if that required aircraft flying empty, CEO Michael O’Leary said, with pay restoration planned for the next three to five years. Costs per passenger were €31 compared to €39 for Wizz Air, it says.

Ryanair and its subsidiaries Buzz (Poland) and Malta Air also renegotiated new contracts with a number of airports to reduce costs, at the same time extending them well into the future. It has a deal with London Stansted and Bergamo until 2028, and with Brussels Charleroi until 2030. Agreements with eight airports like Stockholm, Riga, Billund, and Milan have been agreed to make them into a Ryanair base which will help them recover capacity after routes were discontinued of went bust, O’Leary said.

The Irish group had €3.15 billion in liquidity by the end of March, thanks in part to €1.95 billion in new financing through shares, bonds, and supplier reimbursements. In FY21, the airline made €227 million in impairments, mostly on unfavorable fuel hedging. While Ryanair used to hedge over ninety percent of its fuel costs pre-Covid, O’Leary said that it’s more likely that post-Covid this will change to sixty-seventy percent.
Net debt stood at €5.43 billion, up from €4.21 billion the previous year. Ryanair plans to reduce its debts over the next twelve months by €1.45 billion.

May-bookings up three times that of April

On the outlook for FY22, Ryanair says that there is low visibility right now and Q1 (March-May) has been weak at just five to six million passengers carried. However, when the UK and other countries announced the lifting of travel restrictions from mid-May, there has been a significant pent-up in bookings. “In the first week of April, we had some 500.000 bookings. Last week, this was up to 1.5 million. Clearly, it won’t continue to grow at that rate but it does show that there is a very strong pent-up demand for low-fare air travel.” Ryanair responded by adding capacity on routes from the UK to Portugal.
If the trend continues, the July-September quarter should be strong and demand should remain high from then onwards, which makes eighty million passengers a realistic and even conservative forecast for FY22.

O’Leary slams Boeing over late deliveries…

Ryanair’s return to profitability and further cost reductions hangs largely on the introduction of the Boeing MAX 8200, the ‘Gamechanger’ as O’Leary repeatedly called it. After the high-density version of the 8 got EASA approval in April, Ryanair had hoped to receive the first aircraft in early April. The latest electrical wiring issues have forced Boeing into a delivery pause. Now that the FAA has approved the service bulletins to address the issue on two places on the flight deck, Ryanair is counting on a late May first delivery.

“Although we are losing confidence in Boeing’s ability to deliver in this latest deadline”, O’Leary noted. “Originally, we had hoped to take delivery of forty of them in advance of summer 2021 but as the management team in Seattle continues to mismanage that process, I think that there is a real risk that we may not see any of these aircraft in advance of summer 2021. In the short term, there is nothing but problems that do not lay with the FAA or EASA but with Boeing. On the medium-term, this is a very exciting aircraft and we are looking forward to taking those deliveries.”

On CNBC, O’Leary was even more outspoken and criticized Boeing for failing to respond to a letter sent ten days ago, in which Ryanair requested an update on the delivery scheme. “I think there is a degree of complacency among the management. The leadership under David Calhoun and Greg Smith has been phenomenal the last twelve months, but I think the regulators are not happy with the way they are treated by management in Seattle. And we as a customer are not happy with the responses or the lack of responses we are getting. Boeing needs to up its game.”

Before the summer of 2022, Ryanair and subsidiaries count on having a fleet of at least sixty 8200s, with some fifty aircraft to join the fleet each year until FY26. By then and after selling or returning some 737-800s to lessors, the group should have some 600 aircraft compared to 422 now, of which fifty are with Malta Air, 120 with Buzz, 29 at Lauda, and the remainder at Ryanair.

Boeing MAX 10
The Boeing 10 is still very much on Ryanair’s radar, said Michael O’Leary. 

… but still wants the 10

Last December, Ryanair ordered another 75 8200s to bring its total order to 210. O’Leary confirmed that his airline is ‘first in the queue’ for a follow-on order for the larger MAX 10, “but the pricing isn’t right. I am reasonably hopeful that once we get the Gamechanger aircraft delivery issues resolved, we can then focus our energies and those of Boeing on negotiating on what I hope would be a follow-on order of 10s, which would take us out to deliveries between 2026 to 2030.”
Lauda currently has 29 Airbus A320s but the first will be returned from winter 2022 and will be wind down over a four-year period as it transitions to Boeings in due course.

Potentially eating into the cost reductions could be higher fares from Eurocontrol and other air traffic management providers and airports. “We called onto regulators to be wary of that. We all suffered huge losses in the past twelve months but the can’t be the insure of last resort of monopoly providers of either air traffic control services of monopoly airports.”

Ryanair also is ambitious on meeting sustainability targets, receiving a B-climate protection rating from the Carbon Disclosure Project recently and aiming for an A-rating in the coming two years. In 2030, the airline plans to use 12.5 percent of sustainable aviation fuels and cut carbon dioxide emissions per passenger by ten percent to sixty grams. No later than 2025, Ryanair will ban all plastics.

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