- December 2022 passengers numbers up 21%
- Discount flyer continues to pass on rising costs
- Holidays on a tight budget could be good for Ryanair
Budget airline Ryanair (RYA:EURONEXT) ended 2022 flying two million more passengers in December than it did in December 2021. Passenger numbers hit 11.5 million, from 9.5 million the previous year, a 21% jump. After false starts in its recovery last year, 2023 promises to be a much brighter one for the discount carrier and its embattled shareholders.
‘As weaker rivals have entered the departures lounge, Ryanair’s competitive position has been enhanced, though this is not such good news for passengers,’ said Russ Mould, investment director at AJ Bell. ‘The company has a well-earned reputation as a hard-nosed operator and it is successfully passing on higher costs to its customers.’
CAN DEMAND HOLD UP?
‘For the time being increased fares seem to be having a limited impact on appetite for air travel, with an element of pent-up demand providing some support. Whether that can continue as other inflationary pressures take their toll remains to be seen,’ said the investment platform’s commentator.
The ability to protect profit margins by raising seat prices has become part of Ryanair’s winning formula, and it remains one of the slickest-run airlines anywhere. The flyer operated over 65,500 flights in December 2022 with a load factor of 92%, compared to 81% a year earlier.
For the whole of 2022, traffic more than doubled to 160.4 million passengers, demonstrating its ability to keep customer bookings up even when many passengers freely throw criticism at the business.
SCOPE FOR SHARE PRICE RECOVERY
Having ended 2022 at €12.21, 26% lower than where the year began, and with holiday makers likely to look at budget-friendly options in a year when cost-of-living pressures are likely to persist, investors can start to feel more confident about the future.
‘Budget airline Ryanair undoubtedly deserves some credit for the heights it has reached in the wake of the pandemic,’ said AJ Bell’s Mould. ‘Emerging from Covid with a strong balance sheet and with traffic above pre-pandemic levels over Christmas, Ryanair is testament to a Darwinian, survival of the fittest transition in the airline industry.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Steven Frazer) and the editor (Tom Sieber) own shares in AJ Bell.
