Ryanair is buoyant that its total number of passengers carried in FY23 will reach a record-high 168 million and net profit reach between €1.0 and €1.2 billion. The airline expects to build on a strong HY1, although it takes a cautious eye to what happens with Covid and Ukraine this winter. And if Boeing is able to deliver on its promises… Ryanair’s FY23 guidance depends on Covid and Boeing.

In the March-September period, Ryanair produced a pre-exceptional net profit of €1.263 billion compared to €-47.6 million in the same period of FY22. The result includes a €-107.4 million loss on jet fuel caps. The carrier generated €4.424 billion in passenger revenues and €2.191 billion in ancillary revenues or €23 per passenger. The combined €6.616 billion in revenues compares to €2.155 billion last year. Ryanair, Malta Air, Buzz, and Lauda carried a combined 95.1 million passengers, up from 39.1 million last year. The load factor was 94 percent, nearing 96 percent of FY20.

Looking at HY1 revenues, Italy continues to be the strongest single market, with €1.5 billion earned there, ahead of Spain with €1.2 billion and the UK at €980 million. Ireland contributed €377 million and other markets with €2.7 billion. Total expenses of €5.1 billion include €2.3 billion in fuel costs compared to €713.1 million last year, but as it flew more, all other costs were also higher. Costs per passenger were €31. The net profit was €1.515 billion, up from €-50.5 million last year.

In Q2 (June-September), Ryanair benefitted from higher fares, up fourteen percent of FY20, and more than offsetting the weak Easter period in Q1 that was affected by lower bookings after the war in Ukraine started. Operating at 115 percent capacity over the summer, Q2 revenues jumped to €4.015 billion €1.784 billion in the same period last year. Expenses were up by over a billion euros this quarter to €2.739 billion, producing an operating profit of €1.276 billion (2021: €254 million) and a net profit of €1.076 billion (€225 million).

CEO Michael O’Leary was keen to stress that Ryanair didn’t suffer from operational or staffing issues of its own during the summer, although it suffered from ATC problems and a number of strikes. He claimed a cancelation rate of just 0.02 percent of all flights, but these were for the UK flights only. That Ryanair escaped problems has to do with crewing up early for this summer and not cutting on crew training and recruitment, “as we knew there would be a recovery.” It caused huge gains in market share, up fourteen percentage points to forty percent now in Italy and to thirty percent on Wizz Air’s home ground in Hungary (up thirteen percent). For its future growth, the airline needs 6.000 new staff and is already training over 1.000 pilot cadets right now and recruiting new maintenance staff.

‘Impact inflation is exaggerated’

O’Leary repeated that the coming winter season will be loss-making, as it is its weakest season and another Omicron situation or effects from the war in Ukraine could be on their way. However, he isn’t somber about the economic outlook and downplayed the effects of inflation on his airline. Concerns about the impact of recession and rising consumer price inflation on Ryanair’s business model have been greatly exaggerated in recent months. As the lowest-cost producer in Europe, we expect to grow strongly in a recession as consumers won’t stop flying, but rather they will become more price sensitive. Like (supermarket discounters) Aldi, Lidl, Ikea, and other price leaders our very strong post Covid recovery shows that price will continue to drive market share gains as we add low-cost, more fuel efficient, aircraft to our fleet over the next four years.”

O’Leary thinks that Ryanair will benefit more than others from the contraction in short-haul capacity that has happened in Europe since the pandemic. “Most of our EU competitors have cut capacity by up to twenty percent this winter while Ryanair will offer ten percent more seats than pre-Covid.”  Based on strong bookings in October and for the upcoming Christmas period, the airline is optimistic about the current Q3 but says it has “zero visibility into Q4” (January-March) when it trims back capacity to 110 percent. Yet, Ryanair has modestly raised its guidance for FY23 and now expects to carry 168 million passengers, up from 166.5 million in its previous guidance and 165 million in July. Reaching 168 million would be up thirteen percent over pre-pandemic levels.

Worries about MAX deliveries

If Ryanair succeeds, depends on the arrival of 51 more Boeing MAX 8200 aircraft until next summer. The airline currently operates 73 of them but expects only ten or twelve more before the end of the year instead of the planned twenty. Boeing assures us that they will deliver all scheduled 51 Gamechangers ahead of peak S.23, although there is a risk that some of these deliveries could slip,” said O’Leary. This could affect deliveries in Q4 and Q1 in FY24, which is the first quarter of the upcoming summer season.

There is uncertainty if five to ten aircraft are being delivered on time, which would leave Ryanair at 41-45 MAX 8200s by next summer. “We are planning FY24 growth based on 51 extra aircraft for peak S.23 and we continue to recruit and train substantial numbers of pilots, cabin crew and engineers.” He added: “Even if Boeing leaves us slightly short of aircraft, we have a reasonable chance of getting to 185 million passengers in FY24.”

Reaching 225 million in FY26 remains the target and is possible without extra aircraft, so there is no pressure the order the MAX 10 that Ryanair is keen to have. O’Leary said that he thinks it is vital that US Congress gives Boeing an exemption on the December 31 deadline and have it certified without the need for a cockpit systems update: “There are thousands and thousands of jobs across North America relying on that extension. We also think it is a critical safety issue: we don’t want to see two different cockpit types on the MAX.”

Ryanair’s current 409 737-800s will be looking a bit more like the MAX as they will be fitted with identical scimitar winglets from the coming winter period. The airline will invest €200 million in a wingtip retrofit as the new version will give a 1.5 percent fuel burn improvement per aircraft. In September, Ryanair signed an uptake agreement with OMV for 160.000 tons of sustainable aviation fuel (SAF) at airports in Austria, Germany, and Central Europe. This complements the uptake agreement with Neste at Amsterdam Schiphol.

Long-term labor agreements

The airline says that it has now reached new long-term agreements about pay and rosters that cover ninety percent of pilots and cabin crew through 2026-2027. The pay restoration, which was brought forward from 2025 to April next year, has been further advanced to the coming December on the back of the strong HY1 results. This restores the pay cuts that were agreed upon in 2020 following the Covid crisis. O’Leary called on the remaining ten percent of its pilots in Belgium and Ireland to resume negotiations and sign the new agreements.

Ryanair ended September with €4.6 billion in cash, up one billion from March. Net debt was reduced by a billion to €0.5 billion. Our focus over the next year is the repayment of €1.6 billion of maturing bonds (in March and August) while returning our balance sheet to a broadly zero net debt position” by March 2024. Over ninety percent of its current fleet is unencumbered. Capital expenditures for FY24 will be around €2.2 billion, with aircraft purchases financed from its own resources and hedged through 2026. The airline has hedged 81 percent of fuel this FY23 and currently fifty percent for FY24, with currencies hedged at eighty percent this financial year and twenty percent next year. 

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Active as journalist since 1987, starting with regional newspaper Zwolse Courant. Grand Prix reporter in 1997 at Dutch monthly Formule 1, general reporter Lelystad/Flevoland at De Stentor/Dagblad Flevoland, from 2002 until June 2021 radio/tv reporter/presentor with Omroep Flevoland.
Since mid-2016 freelance aviation journalist, since June 2021 fully dedicated to aviation. Reporter/editor AirInsight since December 2018. Contributor to Airliner World, Piloot & Vliegtuig. Twitter: @rschuur_aero.

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