Ryanair Holdings PLC updates
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Signs of a long-awaited recovery in European aviation are growing after Ryanair reported a “surge” in late summer bookings and raised its forecast for passenger numbers over the next year.
The low-cost carrier said the rebound was down to vaccinations, the introduction of an EU-wide digital travel pass at the start of this month and the rollback of isolation rules for vaccinated travellers in the UK.
Michael O’Leary, Ryanair’s chief executive, predicted a recovery in air travel over the winter and into next summer. “We have seen a strong rebound in pent-up travel demand,” he said.
Shares rose 4 per cent to €16.36 by late morning on Monday and are trading above levels just before the outbreak of coronavirus.
The carrier’s upbeat outlook mirrors rival easyJet, which last week said it would increase the number of flights it operates over the late summer in response to strong bookings, particularly from continental Europe.
Heathrow airport also on Monday said the UK was “emerging from the worst effects” of the pandemic but said the country was lagging behind a quicker recovery in continental Europe.
The industry has been desperate for any signs of a sustained rebound in demand for flying following 15 months of mounting losses.
Ryanair produced a net loss of €273m in the three months to the end of June, with Easter largely a write-off. This compared with a net loss of €185m in the same quarter last year.
The airline carried 8.1m passengers in the quarter, but outlined how flying has since rapidly rebounded, with 9m passengers forecast for July and 10m for August. Ryanair was taking 2m bookings per week in June, four times more than in March.
With passengers booking late and fares below pre-Covid levels, Ryanair warned that it was still difficult to provide meaningful earnings guidance, but expects to post “somewhere between” a small loss and break-even this financial year, which runs until the end of March. “The likely outcome of [the financial year] . . . has improved,” O’Leary said.
The airline expects to carry between 90m and 100m passengers in the year, a slight increase from its previous guidance, which was at the lower end of a range between 80m and 120m. Ryanair carried 149m passengers a year pre-Covid, and hopes to reach 200m per year in four years’ time.
That bullish forecast underlines how O’Leary hopes to emerge from the Covid crisis strengthened as weaker rivals retrench and growth opportunities open up across Europe.
The airline has a strong balance sheet and had €4.6bn in cash at the end of June, up from €3.2bn three months earlier. Net debt fell during the quarter, from €2.3bn to €1.7bn.
But the rise of Wizz Air has offered Ryanair competition in the ultra-low cost end of the industry, with the London-listed and Hungarian-based airline also outlining plans for a rapid expansion as Covid-19 fades.
Wizz’s shareholders will on Tuesday vote on a pay package that will reward chief executive Jozsef Varadi with a bonus of up to £100m if he can rapidly expand the airline following the pandemic.
Still, losses are piling up across the aviation industry.
Heathrow posted an adjusted loss of £787m in the first six months of the year and said fewer than 4m passengers had passed through the airport this year, a number that would have taken just 18 days to reach in 2021.
The airport, which has £4.8bn in liquidity, forecasts passenger numbers to recover to 21m for 2021 as more people fly, but has asked its creditors to extend a waiver on a covenant threatened by the business’s low cash flow.
