- Budget airline ups target for passenger numbers
- Bookings ‘strong’, Ryanair says in statement
- Revenues up 200% in first half
Budget airline Ryanair (RYA:IDEN) raised its full-year passenger target as it reported strong demand. Full-year profits are likely to come in above €1 billion. The airline reported a half-year net income of €1.37 billion due to favourable demand and pricing dynamics that saw record second-quarter traffic and summer fares which were 14% up on pre-Covid pricing.
Ryanair shares rose 3% and the read-across helped lift other airlines stocks, with BA-owner International Consolidated Airlines (IAG) and EasyJet (EZJ) up 1.5% and 2% respectively. Wizz Air (WIZZ) jumped more than 5%.
The discounter flyer said it now estimates that 168 million people will board its flights during its 2023 fiscal year (to March 2023), up from a previous guidance of 166.5 million. That would be 13% more than its pre-Covid levels.
Ryanair cited ‘strong’ forward bookings heading into the key Christmas travel season, as well as hopes that annual fares will come in ahead of 2019 figures in the mid-to-high single-digit range. But it warned that it is still cautiously eyeing events that may negatively impact passenger demand over the rest of the year.
‘The recovery for the remainder of full year 2023 remains fragile and could yet be impacted by new Covid variants or adverse geopolitical events such as Ukraine,’ chief executive officer Michael O’Leary said in a statement.
Should these events be avoided, Ryanair predicts that annual profit before exceptional items will be in the range of €1 billion to €1.2 billion.
STRONG SUMMER FOR FLIGHTS
In the firm’s first half, record second quarter traffic and strong peak summer fares, supported by soaring inflation, helped offset a slowdown in Easter demand in the first quarter stemming from the Ukraine conflict.
Total revenues jumped by more than 200% to €6.62 billion, helping push pre-tax income to €1.42 billion in the half year. In the same timeframe last year, Ryanair slumped to a loss of €100 million.
‘Concerns about the impact of recession and rising consumer price inflation on Ryanair’s business model have been greatly exaggerated in recent months,’ O’Leary said.
Meanwhile, operating costs rose by 126% to €4.98 billion, driven by a sharp jump in fuel expenses. Despite the fuel costs jump, analysts at Citi called Ryanair’s cost controls ‘strong’, saying that should help drive the airline’s share price higher.
The stock has gone nowhere since March, so investors will hope that Citi is right.
