LONDON – In August, AviationSource reported how Ryanair could be tipped for further growth, even with national concerns of a recession were on the cards. Fast forward three months, and this morning Europe’s largest low cost carrier has today released its financial results from April – September 2022.
As outlined by Chief Executive Officer Michael O’Leary earlier this year, Ryanair put itself in a position to be able to take advantage of rising inflation and interest rates by being able to offer lower fares in comparison to competitor airlines:
“A deep recession in the UK or an energy crisis will certainly affect overall demand, but within that – as has happened in the last four or five recessions – you see people trading down from high-fare airlines like BA and Easyjet, to low-fare airlines like Ryanair.”
With €1.37 billion in profits, it looks as though that statement has rung true. The Dublin based, low cost carrier has outstripped its financial performance from the same 6 months in 2019 by nearly 20%. Contributing to this was a 15% traffic growth and a 14% fare rise that O’Leary said he has not seen in all his years in the industry.
Operating costs have risen to €4.98 billion, which should come as no surprise as there has been a 205% increase in fuel costs with €2.18 billion being spent in that department. “We expect these strong fundamentals will continue to underpin robust traffic and average fare growth for the next 18-months at least” said O’Leary.
O’Leary has a track record for making sound financial decisions, and upon release of the 1H23 results he said that “Concerns about the impact of recession and rising consumer price inflation on Ryanair’s business model have been greatly exaggerated in recent months.”
In the six months to the end of September 2022, the carrier had flown a record 95 million passengers, which has helped support the increase in forecast for its end of year figures. Initially forecasted to carry 166.5 million passengers, this number has now increased to 168 million based on the first six months results and a record winter schedule that will offer 10 percent more seats to passengers than in 2019.
Bookings are said to remain strong for the last two months of 2022, but with a lack of visibility over the first quarter of 2023, Ryanair forecasts that its end of year position will see an after-tax profit of between 1-1.2 billion euros.
One area of concern for CEO O’Leary is that they may not receive all of the Boeing 737 MAX aircraft that it has previously been committed to be delivered to them. 51 of the aircraft are due before summer 2023, but on current forecasts Ryanair may only be in line to get between 40-45.
Back in September the airline chief publicly called out the American planemaker by saying: “They say they can. We doubt their capacity to deliver. We were supposed to get 21 aircraft this side of Christmas. They are now mumbling it might be 17, it might be 15. It’s difficult to get any specifics out of Boeing.”
In a boost for staff of the company, they will see changes to long term agreements made in the midst of the Covid pandemic too. Staff agreed to reductions in salary in a bid to keep the business operational, and it has now been announced that salary restoration will be brought forward to 1st December ’22 rather than the agreed April 2023.