Ryanair cuts $660m in losses as aviation’s recovery continues
Europe’s leading low-cost airline Ryanair has announced an improvement in its financial performance for the past year but is taking a cautious approach towards its continued recovery despite various factors still impacting the airline industry,forecasting a modest return to profitability by 2023.
Ryanair Holdings plc (which runs Ryanair, Ryanair UK, Lauda, Buzz, and Malta Air) has announced its latest financial results. Although the airline remains in the red, its losses are reducing. The airline posted a smaller than expected loss of US$393 million for the year ending March 31st, 2022. This compares favorably to the US$1.05 billion loss it made in the previous year.
The airline carried 97.1 million passengers in the last financial year, compared to just 27.5 million for the previous period. The current year expects to carry 165 million passengers, lifting it to match pre-pandemic levels, as remaining travel restrictions are dropped due to ‘pent-up demand’, according to the airline.
The operating loss for the period was US$517 million versus US$€923 million for the previous year. Operating expenses soared to $US5.83 billion from US$2.75 billion, with fuel costs up by 237% to US$1.98 billion and airport handling charges also much higher as traffic increased.
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Total revenues tripled to US$5.28 billion from US$1.76 billion, of which US$€2.92 billion is from passenger revenues (up from US$1.14 billion in 2020/21) and US$2.36 billion from ancillary revenues (US$659 million in 2020/21). To stimulate travel, Ryanair lowered its fares by an average of 27% to US$29.
Announcing the latest results for the Ryanair Holdings plc, Michael O’Leary, Chief Executive Officer, said;
“There is no doubt that traffic is recovering. We have seen in recent months stronger traffic and higher load factors, but most of that has been driven by lower fares. In the current first quarter, fares will be below 2019 levels. There is a prospect that fares in the September quarter could be ahead of 2019, but that recovery is fragile and could be severely damaged by negative news flows. But we expect Ryanair to grow faster in a recession, as has happened before after 9/11, the Gulf war, and previous economic crises.
The carrier earned, on average, US$24.2 per passenger from ancillary revenues, priority boarding, and seat reservation. Load factors were up to 82% in 2021/22, up from 71% in the previous year.
However, while Ryanair expects to return to ‘reasonable’ profitability by 2023, it has warned that the recovery in the travel sector remains ‘fragile’ as it still has to keep fares low to entice passengers back who are more likely to book much closer to the travel date than before COVID-19 due to travel uncertainties.
