Ryanair swung back into profit in its first quarter but with continued uncertainty over the Ukraine war and Covid-19. Europe’s biggest budget carrier warned “the days of € 9.99 fares are probably coming to an end”.
The Dublin-based airline posted profit before exceptional items of € 170mn in the three months to June, from a loss of € 273mn in the same period last year and well above the consensus market forecast of € 157mn.
However, that was still well below the € 243mn pre-pandemic profit in the first quarter of the 2020 fiscal year.
Chief Executive Michael O’Leary warned that the war and potential for new Covid-19 outbreaks ahead meant the recovery was “strong but still fragile”.
Nevertheless, Ryanair has locked in cost savings and had secured a “massive competitive advantage” through fuel and other hedging, Neil Sorahan, chief financial officer, told the Financial Times.
In addition, Ryanair is taking delivery of 50 new Boeing 737 higher-efficiency, lower-emission aircraft this winter, “so I believe we’ll perform well in a recession, if there is one”, he added.
While Ryanair is not canceling flights, Sorahan warned that air traffic control and other airport problems meant passengers could still expect summer delays at European airports that have inflicted misery on holidaymakers in recent weeks.
He suggested passengers will also have to get used to higher fares.
“Fuel has gone from $ 40 a barrel to over $ 100 a barrel. So it’s not credible that we will continue to offer those kinds of terms in a high fuel environment, ”he said. “The days of the € 9.99 fares are probably coming to an end.”
Passenger numbers reached 45.5mn in the first quarter, and the airline had its busiest month ever in June. Sorahan said Ryanair remained on track to reach 165mn passengers this financial year.
Stephen Furlong, airlines analyst at Davy stockbrokers in Dublin, said the airline’s market share gains as Covid-19 restrictions have eased – such as a 14 per cent rise in Italy – were “staggering”.
Ryanair said its net debt had fallen to € 0.4bn from € 1.45bn at its March 31 year-end.
Without the Ukraine war, which hit Easter passenger numbers, “we probably would have been on track for something like pre-Covid [levels]”Sorahan said.
Ryanair, which has been able to bounce back quickly because it cut salaries rather than dismissing staff during the pandemic, said it had agreed pay restoration deals with 80 per cent of pilots and 70 per cent of cabin crews.
This summer, it is operating 73 of the low-emission 737 aircraft, which it says deliver 4 per cent more seats but burn 16 per cent less fuel and are 40 per cent quieter.
“I think the message to our customers is that we have the latest technology and voluntary carbon offsets,” Sorahan said. “That’s the way to fly. People are not going to stop flying. “