Ryanair Sees Very Strong Summer If No COVID Setback
Ryanair expects huge pent-up demand to lead to record summer passenger numbers and higher ticket prices if the recovery is not thrown off course by a new COVID-19 variant, group chief executive Michael O'Leary has said.
But he said that the budget carrier's outlook remains uncertain and that it is currently cutting fares aggressively to try to restore passenger numbers to pre-pandemic levels by March.
O'Leary was speaking to investors after Ryanair reported a loss of €96 million for the final three months of 2021, broadly in line with a consensus estimate of a €101 million loss in a company poll of analysts.
The Irish airline, which is Europe's largest by passenger numbers, reiterated its forecast for a loss of between €250 million and €450 million for its full financial year ending March 31.
"Very Strong Bounce Back"
Ryanair has seen a "very strong bounce back" in bookings in recent weeks, O'Leary said, which should help passenger numbers recover rapidly from six to seven million in January to eight to nine million in February and 11 to 12 million in March - reaching pre-COVID-19 levels for that month.
Investors' focus on the "very short term, slightly cautious commentary" led shares to fall by as much as 6% after O'Leary's comments, Goodbody analyst Mark Simpson said, even as they did not include anything that undermined the view of a summer recovery.
Aircraft Occupancy And Capacity
O'Leary said Ryanair's aircraft should be almost 90% full by April and above that level in the summer. The airline has said that it is profitable when occupancy reaches 80%.
Ryanair is unlikely, however, to return this year to filling 95% of seats as it did before the pandemic, he added.
Ryanair expects to fly 14% more capacity this summer than in the same season of 2019, and will carry a record 165 million passengers in the year to March 2023 up from just under 100 million in the current year and a pre-COVID-19 record of 149 million.
Easter Holidays And Summer
The Easter holidays in April are critical, O'Leary said. If they pass without a major COVID setback, "we think we will be set fair for a very strong summer recovery," he said.
While it was too soon to forecast summer fare levels, O'Leary said they should be helped by the likelihood of approximately 10% less short-haul capacity in Europe than in the summer of 2019 due to airline failures and cuts by rivals.
"With the combination of less capacity short-haul and higher oil prices, I struggle to see why...there won't be a strong pricing recovery - certainly into the peak summer months" absent negative COVID-19 developments, he said.
Rivals easyJet and Wizz have both said in recent days that they expect strong demand for summer holidays, but Wizz said that excess capacity could weigh on pricing. Their shares were down 0.9% and 3%, respectively, on Monday 31 January.
Higher Level Of Fuel Hedging
A higher level of fuel hedging than many rivals will give Ryanair the option of being "aggressive on pricing" to fill planes if necessary, O'Leary said.