Shares in budget airline Ryanair (RYA) soared 9.5% to €9.25 after its full year results showed it has gone into the coronavirus crisis on the back of big rises in revenue and profit.
In its full year results to 31 March, Ryanair reported a 13% jump in profit after tax to €1bn and a 10% increase in revenue to €8.49bn, having flown 4% more passengers with a total of 148.6m during the year.
It leaves Ryanair with one of the strongest balance sheets in the aviation industry with a current cash balance of around €4.1bn.
CASH BURN DROPS 70% IN TWO MONTHS
The firm said cost-cutting measures put in place since mid-March has led to its average weekly cash burn dropping 70% from approximately €200m in March to just over €60m in May.
Ryanair said its focus over the next 24 months will remain on cash preservation/generation and the repayment of maturing debt.
Going forward, the airline now expects to record a loss of over €200m in its first quarter between April and June, with a smaller loss expected in the peak summer period between July and September, due to a substantial decline in traffic and pricing from Covid-19 groundings.
UPDATE PUSHES RIVALS’ SHARES HIGHER
Ryanair added that it currently expects to carry less than 80m passengers in total during its financial year to 31 March 2021, almost 50% below its original 154m target and revised down further from the ‘less than 100m passengers’ it said in its update two weeks ago.
But the low-cost carrier’s news was better than the market expected, with Ryanair’s outlook helping drag the share prices of other airlines higher.
British Airways owner International Consolidated Airline (IAG) rose 6.9% to 181p, while rival budget airlines EasyJet (EZJ) and Wizz Air (WIZZ) jumped 6.7% and 5.6% to 533p and £27.50 respectively.
RYANAIR STILL KEEN ON ‘GAMECHANGER’ 737 MAX
Despite the hit from the coronavirus crisis, Ryanair is also still committed to taking deliveries of the 737 MAX aircraft it ordered from Boeing, with the American aircraft maker guiding a late summer return to service for its 737 MAX in the US.
As such Ryanair said it doesn’t expect to receive any of the aircraft until October at the earliest.
But it remains a fan of what it calls a ‘gamechanger’ aircraft, which have 4% more seats and 16% lower fuel burn, and therefore the ability to ‘transform’ Ryanair’s cost base for the next decade.
