Ryanair Holdings has reported a strong half-year profit of €2.18bn, compared to a prior year H1 profit after tax of €1.37bn, thanks to a strong Easter in Q1, record summer traffic and higher fares which offset significantly higher fuel costs in the half year.
The highlights of H1 were:
- Traffic grew 11% to 105.4m (95% load factor).
- Rev. per pax +17% (ave. fares +24% & ancillary. rev. +3%).
- 3 new bases & 194 new routes in S.23.
- 124x B737 MAX – Total fleet of 563 aircraft on 30 September.
- Fuel bill rose €0.6bn (+29%) to €2.8bn.
- Fuel hedging extended – c.85% FY24 at $89bbl & over 50% FY25 at $79bbl.
- Net cash of €0.84bn (31 Mar. €0.56bn), over €1bn debt repaid.
- 300x Boeing MAX-10 order underpins growth decade to 300m pax p.a. by FY34.
- €400m maiden div. & div. policy announced.
Social Impact
Ryanair said they expect to create over 10,000 new jobs for highly trained aviation professionals as the Group expands their fleet to 800 aircraft by FY34. Building on the success of their aviation training facilities in Dublin, Stansted, Bergamo and East Midlands, they’re opening 2 new training centres in Krakow and Madrid to accelerate local crew training and development in those major markets. The recently announced engineering academy will support 1,000 apprentices annually as they train the next generation of mechanics and engineers. Ryanair Labs is also growing at its development hubs in Dublin, Madrid, Portugal and Wroclaw to support Ryanair’s growth over the coming decade.
Growth & Fleet
During Summer 2023 Ryanair operated its largest-ever schedule, including 3 new bases and over 190 new routes. This winter they’ll operate 6 new bases (Athens, Belfast, Copenhagen, Girona, Lanzarote & Tenerife), and over 60 new routes including their first 17 routes to Albania. To date over 90% of summer ‘24 capacity is already on sale, including over 180 new routes.
While Boeing is currently suffering delivery delays with their fuselage supplier Spirit Aerospace, they are working with them to minimise delays ahead of peak summer 24. At this stage, they are concerned that up to 10 of the 57 contracted 737 MAX deliveries pre-summer ‘24 may be delayed until winter 2024.
H1 FY24 Business Review
H1 scheduled revenues increased 37% to €6.1bn. Traffic grew 11% to 105.4m while average fares rose 24% to around €58 due to a strong Easter and record summer 23 demand. Ancillary revenue increased 14% to €2.5bn (c.€23.70 per passenger). Total H1 FY24 revenue therefore rose 30% to €8.6bn. Total operating costs increased 24% to €6.2bn, primarily due to much higher fuel costs (+29% to €2.8bn), higher staff costs and higher ATC fees. Ryanair’s cost advantage over most of its EU competitors continues to widen, with H1 ex-fuel unit costs finishing just under €32.
FY24 fuel requirements are almost 85% hedged at approximately $89bbl (a mix of forwards and caps) while their FY25 hedging has increased to just over 50% at approx. $79bbl. This will deliver savings of approx. €300m on the fuel already hedged for FY25. Over 90% of FY24 €/$ opex is hedged at 1.08 and almost 50% of FY25 is hedged at 1.12.
Balance Sheet & Liquidity
Ryanair’s balance sheet remains one of the strongest in the industry with a BBB+ credit rating (both S&P and Fitch) and over €3.6bn gross cash at period end, despite €1.6bn capex and over €1bn debt repayments (incl. a maturing €750m bond & €260m prepayment of the RCF in August). Net cash was €0.84bn on 30th September. (€0.56bn at 31 Mar.). All of the Group’s owned B737 fleet (534 aircraft) are unencumbered, which significantly widens their cost advantage over competitor airlines who are heavily exposed to rising interest rates and rising aircraft lease costs.
Environment
Speaking on the environment, Michael O’Leary, said: “We’re accelerating the retro-fit of scimitar winglets to almost 130 B737NGs (target 409 by 2026), reducing fuel burn by 1.5% and lowering noise emissions by a further 6%. We are working with fuel partners to accelerate SAF supply and are on track to achieve the Group’s ambitious 2030 goal of powering 12.5% of Ryanair flights with SAF (9.5% already secured).”
“The urgent reform of Europe’s inefficient ATC system is one of the most significant environmental initiatives the EU can deliver. In 2023, French ATC has (so far) inflicted over 60 days of strikes on our sector, during which the French Government use minimum service laws to protect local/domestic flights while disproportionately cancelling overflights. In September, we delivered a petition (signed by 1.5m customers) calling on the EC to protect the single market for air travel by protecting overflights (while respecting ATC Unions right to strike), as is already the case in Greece, Italy and Spain. Sadly, we have yet to see any action from President Ursula von der Leyen on this key environmental initiative.”
“Our recent order for 300 Boeing MAX-10 aircraft (21% more seats, 20% less fuel & CO2 and 50% quieter), enabled us to reset the Group’s environmental targets as we strive to more sustainably grow traffic to 300m p.a. by FY34. In H1, we set a very ambitious target of 50 grams of CO2 per pax/km by FY31 (previously 60 grams by FY30) and published Ryanair’s 1.5 degree Climate Transition Plan.”
Outlook
Ryanair continues to target approximately 183.5m (+9%) FY24 traffic, although the final figure depends on Boeing meeting their delivery commitments between now and year-end. As previously guided, they expect ex-fuel unit costs to increase by c.€2 this year, which still widens the cost gap between Ryanair and competitor airlines in Europe. Forward bookings (both traffic and fares) are robust over the late October mid-terms and into the peak Christmas travel period.
Despite uncertainty over Boeing deliveries, a significantly higher full-year fuel bill (up c.€1.3bn on last year), very limited Q4 visibility and the risk of weaker consumer spending over coming months, they now expect that FY24 PAT will finish in a range of between €1.85bn to €2.05bn, assuming modest losses over the H2 winter period. This guidance remains highly dependent on the absence of any unforeseen adverse events (for example such as Ukraine or Gaza) between now and the end of March 2024.
October Traffic
Traffic last month crew 9% to 17.1 million passengers with load factor down by 1% to 93%. Year to date there has been an increase of 15% in passenger numbers to 180.3 million with load factor up 3% to 94%. Ryanair operated over 96,700 flights in October 2023 with approximately 870 flights cancelled due to the Israel / Gaza conflict.
