TIDM0RYA TIDMRYA
RNS Number : 8679G
Ryanair Holdings PLC
24 July 2023
RYANAIR REPORTS Q1 PROFITS OF EUR663M
STRONG EASTER & WEAK PRIOR YEAR COMPS.
DUE TO UKRAINE INVASION
Ryanair Holdings today (24 July) reported Q1 profits of EUR663m,
compared to a Ukraine affected prior year Q1 PAT of EUR170m thanks
to a strong Easter, the extra UK (Coronation) public holiday in May
and weak PY comps. due to Russia's invasion of Ukraine in Feb. 2022
which damaged last year's Q1 traffic and fares.
30 Jun. 30 Jun. Change
2022 2023
Customers 45.5m 50.4m +11%
---------- ---------- -------
Load Factor 92% 95% +3pts
---------- ---------- -------
Revenue EUR2.60bn EUR3.65bn +40%
---------- ---------- -------
EUR2.38bn
Op. Costs * EUR2.94bn +23%
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PAT EUR170m * EUR663m +290%
---------- ---------- -------
EPS (euro
cent) 16.53 58.22 +252%
---------- ---------- -------
* Non-IFRS financial measure, excl. EUR18m except. unrealised
mark-to-market net gain on jet fuel caps.
During Q1:
-- Traffic rose 11% to 50.4m (95% load factor).
-- Rev. per pax +27% (ave. fares +42% & ancil. rev. +4%).
-- 119x B737-8200 "Gamechangers". Total fleet of 558 aircraft at 30 Jun.
-- 3 new bases & 190 new routes opened for S.23.
-- Fuel hedging extended - 75% FY24 at $89bbl & 27% FY25 at $74bbl (via swaps).
-- Net cash of EUR0.98bn (31 Mar.: EUR0.56bn). Ratings upgraded to BBB+.
-- 300x MAX-10 order in May to renew fleet & grow traffic to 300m p.a. by FY34.
Ryanair's Michael O'Leary, said:
ENVIRONMENT:
"Every customer switching to Ryanair from high fare EU legacy
carriers can reduce their emissions by up to 50% per flight. We
continue to invest heavily in new technology aircraft. During Q1 we
took delivery of 21 fuel efficient, B737-8200 "Gamechangers" (4%
more seats, 16% less fuel & CO(2) and 40% quieter). In May, we
signed a deal with Repsol to supply SAF to Ryanair bases in Spain.
This builds on similar SAF arrangements with OMV, Neste & Shell
and puts the Group on track to achieve its ambitious 2030 goal of
powering 12.5% of Ryanair flights with SAF - with 9.5% already
secured.
The most significant environmental initiative Ryanair can
deliver near term, is to press for urgent reform of Europe's
inefficient ATC system. In May we submitted a petition to the
European Commission, signed by over 1m of our customers, calling on
the EU to protect "overflights" during national ATC strikes. We
believe this would reduce flight delays, cut flight times, and
unnecessary CO(2) emissions. Over the past 6 months, French ATC
alone, has held 60 days of strikes, during which the French Govt.
used min. service laws to protect local/domestic flights while
disproportionately cancelling overflights. We, and our customers,
call on the EC President, Ursula von der Leyen, to protect the
single market for air travel and minimise the impact of ATC strikes
on EU citizens (while respecting the right of ATC unions to strike)
by insisting that national Govt.'s protect overflights, as is
already the case in Greece, Italy and Spain.
Today, we are proud to launch Ryanair's 2023 Sustainability
Report ("Aviation with Purpose"). Our recent $40bn order for 300
Boeing MAX-10 aircraft (21% more seats, 20% less fuel and 50%
quieter) will enable us to pursue even more ambitious environmental
targets over the next decade. We have reset our CO(2) per pax/km
target at a very ambitious 50 grams by 2031 (previously 60 grams by
2030). We have also published the Group's 1.5 degree Climate
Transition Plan.
SOCIAL:
As the Ryanair Group traffic grows to 300m p.a. by FY34, we
expect to create over 10,000 new, well-paid, jobs for highly
trained aviation professionals. To facilitate this growth as we
take delivery of 90 more Gamechangers and 300 MAX-10s, we recently
ordered 12 new CAE simulators (6 firm and 6 options worth over
$120m). Building on the success of our new state-of-the-art
aviation training centre in Dublin, we have finalised plans to
develop 2 similar excellence centres to accelerate crew training in
both Central Europe (Krakow) and the Iberian Peninsula. We are also
upgrading our UK training centre in East-Midlands.
This summer, in anticipation of increased ATC disruptions, we
invested heavily in operational resilience (increased crew ratios,
doubled the size of our Dublin and Warsaw ops centres, enhanced our
day-of-travel app. and continuously improving our live customer
comms.) to ensure that our passengers and crew continue to enjoy
Ryanair's industry leading OTP and reliability. This investment has
been rewarded with a strong Q1 CSAT score of 85% (up 2pts on our PY
Q1), with "crew friendliness" continuing to be our top score (rated
over 90%).
GROWTH:
We are operating our largest ever summer schedule (over 3,200
flights and up to 600,000 passengers daily). We have opened 3 new
bases (Belfast, Lanzarote & Tenerife) and over 190 new routes,
further growing our No.1 or No. 2 share in the Italian, Polish,
Spanish and UK markets. We have recently announced plans to fly
to/from Albania this winter, expanding our CEE footprint offering
competition, choice and lower fares than the incumbent carrier.
Structural EU capacity reductions following numerous EU airline
failures or fleet reductions during Covid, volatile oil prices
(discouraging weaker, unhedged, airlines from adding capacity), a
shortage of aircraft (new and leased), the return of Asian traffic
and this year's very strong influx of American visitors to Europe
(helped by a strong US$) means that European short-haul capacity
remains constrained this summer. H1 demand is robust and fares
remain ahead of last year as we move into peak S.23 although this
trend seems weaker in Q2 than it was in Q1.
European airlines will continue to consolidate over the next 2-3
years, with the takeover of ITA (Italy) and the sale of TAP
(Portugal) already underway. The large backlog of OEM aircraft
deliveries is likely to constrain capacity growth in Europe for at
least the next 4 years, which will enable Ryanair to further extend
our market share gains as we take delivery of almost 100
Gamechangers over the next 3 summers. Our unit cost advantage over
EU competitors, fuel hedging, strong balance sheet and low-cost
aircraft orders out to 2033, coupled with our industry leading
operational resilience, creates significant growth opportunities
for Ryanair over the coming years as we grow traffic to 300m p.a.
by FY34.
Q1 FY24 BUSINESS REVIEW:
Revenue & Costs
Q1 scheduled revenues increased 57% to EUR2.47bn. Traffic grew
11% to 50.4m and ave. fares rose 42% to EUR49 thanks to a strong
Easter (the PY Q1 was badly damaged by the Ukraine invasion of Feb.
2022) and an extra UK (Coronation) public holiday in May. Ancillary
revenue increased 15% to EUR1.18bn (c.EUR23.30 per passenger).
Total Q1 FY24 revenue therefore rose 40% to EUR3.65bn. Total
operating costs increased 23% to EUR2.94bn, primarily due to higher
fuel (+30% to EUR1.34bn), staff costs (reflecting restoration of
pay cuts, pre-agreed pay increases and higher crewing ratios as we
invest in op. resilience) and higher ATC fees (incl. in airport
& handling charges). Despite a modest increase in unit costs
(ex-fuel) to just under EUR32 in Q1, Ryanair's cost advantage over
EU competitors continues to widen.
FY24 fuel requirements are almost 85% hedged at approx. $89bbl
(with a mix of swaps and caps) and FY25 hedging has increased to
27% at approx. $74bbl. Over 90% of FY24 EUR/$ opex is hedged at
1.08 and approx. 50% of FY25 is hedged at 1.12. Our B-8200
"Gamechanger" order book is fully hedged at EUR/$1.24 (locking in
significant cost savings as we take delivery of these more fuel
efficient and quieter aircraft).
Balance Sheet & Liquidity
Ryanair's balance sheet is one of the strongest in the industry
with a BBB+ credit rating and over EUR4.8bn gross cash at quarter
end, despite over EUR1bn capex. Net cash increased to EUR0.98bn at
30 June (EUR0.56bn at 31 Mar.). Substantially all of the Group's
B737 fleet is unencumbered, which significantly widens our cost
advantage as interest rates and leasing costs continue to rise for
competitors. We are on track to repay our second 2023 bond of
EUR750m as it falls due in Aug. and EUR2.8bn FY24 capex (incl. peak
Gamechanger capex and a MAX-10 signing deposit) from internal cash
resources.
Our Board strategy, as our business recovers, is to firstly
prioritise pay restoration and multi-year pay increases for our
people. Secondly, we will pay down maturing debt as it falls due
over the next 3 years, while at the same time funding our ambitious
aircraft capex, from internally generated cashflows. Once we are
confident that we can fully fund these large commitments, the Board
will then consider restarting modest returns to shareholders, who
supported Ryanair during the Covid pandemic. We are conscious that
our shareholders invested just over EUR400m during our Sept. 2020
share placing (during the depth of the Covid crisis), and this was
key to Ryanair subsequently issuing an EUR850m bond which helped us
to survive the devastating impact of the Covid pandemic on
travel.
FLEET:
Our Gamechanger fleet stood at 119 at quarter end and we expect
to increase this to 124 by the end of July. We expect to take
delivery of 49 B-8200s (173 in total) by year-end (Mar. 2024). As
previously noted, Boeing has suffered multiple supply chain
challenges, causing repeated delivery delays. We have worked
closely with Boeing to minimise these delays, and the disruption to
our schedules and traffic targets. We had originally expected 51
aircraft deliveries on/before 30 April, but the last of these
deliveries was delayed into July. We hope that our winter
2023/spring 2024 deliveries will be less impacted, but already
there are indications from Boeing that some deliveries may be
delayed from April 2024 to June 2024.
In May, Ryanair signed an order with Boeing to purchase 300
Boeing MAX-10 aircraft (150 firm and 150 options) which, subject to
shareholder approval at our Sept. AGM, will deliver between 2027
and 2033. These aircraft have 39 more seats (228 v 189 on the
Boeing 737NG), but deliver 20% lower fuel consumption, 20% less
CO(2) emissions and are 50% quieter. The additional seats, apart
from increasing revenue growth, will further widen Ryanair's
unit-cost advantage over European competitors for the next 20
years. We expect up to 50% of the order will be used to replace
older NGs, while the remainder will facilitate controlled (but
slower) traffic growth to approx. 300m p.a. by FY34. Given the
strength of the Group's balance sheet, we anticipate that most of
this capex will be funded primarily from internal resources
(although the Group will remain opportunistic in its financing
strategy).
OUTLOOK:
We expect FY24 traffic to grow to approx. 183.5m (up 9%), which
is slower than the 185m originally expected, due to Boeing delivery
delays in spring and in autumn 2023. While the cost gap between
Ryanair and competitor airlines continues to widen, as previously
guided, we expect to see an increase of approx. EUR2 in ex-fuel
unit costs this year due to annualised crew pay restoration, higher
crew ratios, increased ATC & route charges and the impact of
Gamechanger delivery delays. While Q2 bookings are strong, the fare
increase in Q2 will be much lower than in Q1 due to much stronger
PY Q2 pricing in FY23 when peak summer travel snapped back strongly
following the Ukraine invasion. We currently expect Q2 fares will
be higher than the prior year Q2 but by a low double digit
percentage. We noted a softening in close-in fares in late June and
early July. The final H1 outcome is, therefore, highly dependent on
close-in Aug. and Sept. bookings. As is normal at this time of
year, we have very limited Q3 visibility and zero Q4 visibility.
Having enjoyed a bumper Christmas and New Year travel period last
year (the first festive travel season that wasn't curtailed by the
Covid pandemic), we are conscious that consumers may require some
fare stimulation to fill our 25% greater seat capacity this winter
(compared to pre-Covid) following months of rising mortgage rates
and consumer price inflation. If this transpires, then Ryanair's
load active/yield passive strategy, coupled with our industry
leading cost base, will uniquely position our Group to capture
further market share, albeit at lower fares this winter.
Despite uncertainty over H2 Boeing deliveries, accentuated
recently by the collapse of a Yellowstone River bridge in Montana,
a significantly higher fuel bill (up EUR1bn over last year),
volatile oil prices for our unhedged fuel, very limited H2
visibility and the risk of tighter consumer spending this winter,
we remain cautiously optimistic that FY24 PAT will be modestly
ahead of last year. It is, however, still too early to provide
meaningful FY24 PAT guidance. We hope to be in a position to do so
at our H1 results in Nov."
ENDS
Ryanair Holdings plc, Europe's largest airline group, is the parent company of Buzz,
Lauda,
Malta Air, Ryanair & Ryanair UK. Carrying up to 184m guests p.a. on approx. 3,200
daily flights
from 91 bases, the Group connects 230 airports in 36 countries on a fleet of 560
aircraft,
with almost 390 Boeing 737s on order, which will enable the Ryanair Group to grow
traffic
to 225m p.a. by FY26 & 300m p.a. by FY34. Ryanair has a team of over 22,000 highly
skilled
aviation professionals delivering Europe's No.1 operational performance, and an
industry leading
38-year safety record. Ryanair is Europe's greenest, cleanest, major airline group and
customers
switching to fly Ryanair can reduce their CO emissions by up to 50% compared to major
European
legacy airlines.
For further information Neil Sorahan Paul Clifford
please contact: Ryanair Holdings plc Drury
www.ryanair.com Tel: +353-1-9451212 Tel: +353-1-260-5000
Certain of the information included in this release is forward
looking and is subject to important risks and uncertainties that
could cause actual results to differ materially. It is not
reasonably possible to itemise all of the many factors and specific
events that could affect the outlook and results of an airline
operating in the European economy. Among the factors that are
subject to change and could significantly impact Ryanair's expected
results are the airline pricing environment, fuel costs,
competition from new and existing carriers, market prices for the
replacement of aircraft, costs associated with environmental,
safety and security measures, actions of the Irish, U.K., European
Union ("EU") and other governments and their respective regulatory
agencies, post-Brexit uncertainties, weather related disruptions,
ATC strikes and staffing related disruptions, delays in the
delivery of contracted aircraft, fluctuations in currency exchange
rates and interest rates, airport access and charges, labour
relations, the economic environment of the airline industry, the
general economic environment in Ireland, the U.K. and Continental
Europe, the general willingness of passengers to travel and other
economics, social and political factors, global pandemics such as
Covid-19 and unforeseen security events.
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END
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