Ryanair Reports Q3 Net Profit Drop to €15 Million

Ryanair Holdings has reported a 93% fall in Q3 Profit After Tax (PAT) of €15 million, compared to a prior year Q3 PAT of €211m, as higher fuel costs offset revenue gains. While traffic and fares were ahead of the prior year, close-in Christmas/New Year loads and yields were softer than previously expected as Ryanair lowered prices in response to the removal of flights from online travel agents’ websites in early December. PAT for the 9 months ended 31st December 2023 was up 39% at €2.19bn (PY: €1.58bn).

Q3 highlights:

• Traffic grew 7% to 41.4m (LF down 1% to 92%).
• Revenue per pax +9% (average fare +13% & ancillary revenue +2%).
• MSCI ESG rating upgraded from ‘BBB’ to ‘A’ in Dec.
• Fuel bill rose €320m (+35%) to €1.2bn.
• 136 x B737-8200s in total fleet of 574 aircraft on 31st December
• Fuel hedging extended to 65% of FY25 at $79bbl saving €450m.
• Interim dividend of €0.175 per share announced (payable 28 February)

The Board recently announced that Ms. Roberta Neri (an Italian Citizen) has agreed to join the Board of Ryanair Holdings plc as a non-executive director from 1st February.  Roberta is a former CEO of Enav (the Italian air navigation service provider) and has considerable aviation and renewables industry experience.  Both Louise Phelan (SID) and Michael Cawley have confirmed that they do not wish to seek re-election at the 2024 AGM in September and will step down from the Board at that time.  Róisín Brennan, who has significant PLC Board experience (over 5 years on Ryanair’s Board), has been appointed senior independent director (SID) effective 1st April.

At the end of Q3, Ryanair had taken delivery of 136 B737-8200s. They expect to have up to 174 of these aircraft in their fleet by late June for the peak Summer 24 season (+50 from Summer 23), which would be 7 short of their contracted deliveries. There remains a risk that some of these deliveries could slip further. 

Ryanair continues to work closely with Boeing to minimise delivery delays and improve quality control in both Wichita and Seattle. While the recent MAX-9 grounding was disappointing, they don’t expect it to affect the MAX-8 fleet or the MAX-10 certification. Representatives from the company visited Seattle in January and met with Boeing senior management. Boeing is increasing their QA resources in Wichita and Seattle. Ryanair has run extra checks on their recent B737 deliveries and has noted improvements in quality with fewer delivery defects. However, Boeing has more work to do to improve quality and reduce delivery delays, and Ryanair said they fully support the initiatives that Dave Calhoun (CEO) and Brian West (CFO) are taking to improve Boeing’s performance and production.

Q3 scheduled revenues increased 21% to €1.75bn. Traffic grew 7% to 41.4m while average fares rose 13% to over €42, thanks to a strong October mid-term and peak Christmas/New Year travel. Ancillary revenue increased by 10% to €0.95bn (~€23 per passenger). Total Q3 revenue rose 17% to €2.7bn. Operating costs increased 26% to €2.7bn, primarily due to a 35% increase in fuel costs, higher staff costs and earlier maintenance timing. 

Q4 fuel is almost 94% hedged at approx. $89bbl (a mix of forwards and caps) and FY25 hedging has increased to 65% at approx. $79bbl.  Almost 90% of Q4 €/$ opex is hedged at 1.09 and over 70% of FY25 is hedged at 1.11. 

Ryanair’s balance sheet is one of the strongest in the industry with a BBB+ credit rating (both S&P and Fitch) and €2.9bn gross cash at quarter end, despite €1.9bn capex and €1.1bn debt repayments. Net cash was €0.15bn on 31st December, boosted somewhat by the delay of aircraft deliveries into Q4. All of their owned B737 fleet (546 aircraft) are unencumbered. In November the Board announced the Group’s new Dividend Policy, under which an interim dividend of €0.175 per share will be paid on 28th February.   

Ryanair continues to target approximately 183.5m FY24 traffic (+9%), despite slightly lower Q3 load factors and Boeing delivery delays. As a result of these lower load factors and higher staff costs, Ryanair now expects FY24 ex-fuel unit costs to rise by c.€2.50. Q4, traditionally the weakest quarter, will also be impacted by the partial unwind of free ETS carbon credits (from 1st January). The company have narrowed their FY24 PAT guidance to a range of between €1.85bn to €1.95bn (previously €1.85bn to €2.05bn). This guidance and the full-year result remain heavily dependent upon avoiding unforeseen adverse events in Q4 such as the Ukraine war, the Israel-Hamas conflict and further Boeing delivery delays.