Ryanair lowers traffic forecasts as bushfires hit airlines
- Ryanair stated that its profits increased by 290% to 663 million euros in the quarter ending in June
- Higher airfares and up-sells boosted the company’s revenue by just over €1 billion.
- The company has lowered its annual passenger forecast from 185 million to 183.5 million.
Ryanair’s profit nearly quadrupled in the first quarter, but the airline warned of weaker-than-expected demand growth.
The Irish low-cost carrier’s profit rose 290 percent to 663 million euros (£573 million) for the three months ending in June, about 43 million euros more than a survey of company analysts had forecast.
The trade benefited from an excellent Holy Week which was followed by record passenger traffic in May and June.
The update increased pressure on London-listed rivals, with the potential for weaker demand adding to concerns raised by the impact of the bushfires on the mainland.
Strong performance: Low-cost airline Ryanair reported profits up 290% to €663m in the three months ending June
Higher average airfares and ancillary sales boosted revenue by just over €1 billion to €3.65 billion, outpacing the increase in operating expenses caused primarily by rising jet fuel costs.
More than 50 million people flew with Ryanair during the period, even after the airline canceled hundreds of flights due to a strike by French air traffic controllers over controversial pension reforms by President Emmanuel Macron.
However, it has reduced its annual passenger forecast from 185 million to 183.5 million due to delays in receiving new planes.
Boeing was expected to deliver 51 planes to the company by the end of April, but supply chain difficulties meant the last of them didn’t arrive until July.
Ryanair further warned that some aircraft shipments expected in April 2024 could be hampered for up to two months.
But the company is pressing ahead with an expansion plan, following an order for 300 new Boeing 737-Max-10 jets, worth an estimated $40bn (£32bn) at list prices.
Subject to shareholder approval, these aircraft will replace Ryanair’s aging 737NGs and form part of the airline’s goal to increase its annual passenger number from 168 million to 300 million by 2034.
For the current summer season, the Dublin-based group plans to operate its largest ever schedule, with more than 3,200 daily flights carrying up to 600,000 customers a day.
Michael O’Leary, Ryanair’s chief executive, said cost-of-living pressures such as rising mortgage rates could require a “fare stimulus” to fill seat capacity this winter.
He also reiterated his call for “urgent reform of Europe’s inefficient ATC.” [Air Traffic Control] system’, which he said would ‘reduce flight delays, reduce flight times and reduce unnecessary CO2 emissions’.
Ryanair asked the European Commission in May to protect ‘overflights’, the ability of planes to fly over a country, during national ATC strikes following recent industrial action in France.
Last week, EasyJet blamed the “unprecedented ATC disruption” for canceling around 1,700 summer flights, affecting more than 180,000 passengers as a result.
Both EasyJet and Ryanair continue to operate flights as normal to wildfire-ravaged Rhodes, despite other airlines canceling all holiday trips to the island.
Due to the fires, shares of London-listed airlines and travel companies fell on Monday morning, with Wizz Air Holdings Shares was down 3.9 per cent at £25.64, EasyJet Shares 2.65 percent lower at 463.4py TUI actions 2.4 per cent to 594.5p, putting them in the top ten losers of the FTSE 250.
Ryanair shares fell 2.8% to 15.98 euros on the Euronext Dublin stock exchange.
Danni Hewson, head of financial analysis at AJ Bell, said: “Reports of tourists having to check out hotels and sleep in sports halls or on the streets could make others think twice about booking last-minute breaks, fearing they too could be caught up in the chaos.”
“The fall in share prices of companies such as Jet2, EasyJet and TUI suggests that investors are concerned that they will miss earnings forecasts in the short term and possibly incur additional costs from having to fly repatriation flights to bring customers home.”