Ryanair target approx. 183.5m FY24 traffic (+9%), despite slightly lower Q3 load factors and Boeing delivery delays.
Ryanair Holdings reported a Q3 PAT of 15m euros, compared to a bumper prior year Q3 PAT of 211m euros, as higher fuel costs offset revenue gains. While traffic and fares were ahead of prior year, close-in Christmas/New Year loads and yields were softer than previously expected as Ryanair lowered prices in response to the sudden (but welcome) removal of flights from OTA Pirate websites in early Dec. PAT for the 9-months ended 31 Dec. 2023 was up 39% at 2.19bn euros (PY: 1.58bn euros).
Q3 highlights:
- Traffic grew 7% to 41.4m (LF down 1% to 92%).
- Rev. per pax +9% (ave. fare +13% & ancil. rev. +2%).
- MSCI ESG rating upgraded from ‘BBB’ to ‘A’ in Dec.
- Fuel bill rose 320m euros (+35%) to 1.2bn euros.
- 136x B737 “Gamechangers” in total fleet of 574 aircraft at 31 Dec.
- Fuel hedging extended to 65% of FY25 at $79bbl saving 450m euros.
- Interim div. of 0.175 euros per share announced (payable 28 Feb.).
| Q3 FY23 | Q3 FY24 | Change | YTD FY23 | YTD FY24 | Change | |
| Customers | 38.5m | 41.4m | +7% | 133.6m | 146.8m | +10% |
| Load Factor | 93% | 92% | -1pt | 94% | 94% | – |
| Revenue | €2.31bn | €2.70bn | +17% | €8.93bn | €11.27bn | +26% |
| Op. Costs | €2.15bn1 | €2.72bn | +26% | €7.13bn2 | €8.88bn | +25% |
| PAT | €211m1 | €15m | -93% | €1.58bn2 | €2.19bn | +39% |
Ryanair’s Michael O’Leary, said:
Environment
“In Dec., MSCI upgraded Ryanair’s ESG rating to an industry leading ‘A’ (from ‘BBB’) and we remain ranked Europe’s No.1 airline for ESG by Sustainalytics. Our new aircraft technology and increasing use of SAF has positioned Ryanair as one of the EU’s most environmentally efficient major airlines. In Q3 we took delivery of 12, new B737-8200 “Gamechangers” (4% more seats, 16% less fuel & CO2). We continue to retro-fit winglets on our B737NG fleet (target 409 by 2026), reducing fuel burn by 1.5% and cutting noise emissions by 6%. We recently expanded our SAF partnerships with ENI to supply Ryanair’s Italian bases, and we remain on track to achieve our Group’s ambitious 2030 goal of powering 12.5% of Ryanair flights with SAF (10% supply now secured).
In 2023 Europe suffered 67 days of ATC strikes (13 times more than in 2022), forcing airlines to cancel thousands of flights to/from Germany, Spain, Italy and the UK while France in particular uses minimum service laws to protect French local/domestic flights. We continue to call for urgent reform of Europe’s inefficient ATC system which would deliver the most significant environmental improvement in EU air travel. Sadly, there has been no action from the EU Commission. We again call on President Ursula von der Leyen to defend the single market for air travel by protecting 100% of overflights during national ATC strikes, as is already the case in Greece, Italy and Spain.
Board updates
The Board recently announced that Ms. Roberta Neri (an Italian Citizen) has agreed to join the Board of Ryanair Holdings plc as a non-exec director from 1 Feb. Roberta is a former CEO of Enav (the Italian air navigation service provider) and has considerable aviation and renewables industry experience.
Both Louise Phelan (SID) and Michael Cawley have confirmed that they do not wish to seek re-election at the 2024 AGM (in Sept.) and will step down from the Board at that time. We thank them sincerely for their long service. Róisín Brennan, who has significant PLC Board experience (over 5 years on Ryanair’s Board), has been appointed senior independent director (SID) effective 1 Apr.
Growth & Fleet
At the end of Q3, Ryanair had taken delivery of 136 B737 Gamechangers. We expect to have up to 174 of these aircraft in our fleet by late June for peak S.24 (+50 from S.23), which would be 7 short of our contracted deliveries. There remains a risk that some of these deliveries could slip further. We’ve a bumper S.24 schedule on sale with 169 new routes (total 2,600 routes), incl. our first 11 domestic routes in Morocco. While travel demand remains high, we expect S.24 EU short haul capacity to be behind S.23 as competitors ground A320 aircraft in Europe due to the P&W engine issues (and expect these disruptions will run into 2026). We therefore encourage customers to book early on ryanair.com to secure the lowest fares for S.24 before they sell out.
We continue to work closely with Boeing to minimise delivery delays and improve quality control in both Wichita and Seattle. While the recent MAX-9 grounding was a disappointing setback, we don’t expect it to affect the MAX-8 fleet or the MAX-10 certification. We visited Seattle in Jan. and met with Boeing senior management. Boeing are increasing their QA resources in Wichita and Seattle. We have run extra checks on our recent B737 deliveries and have noted improvements in quality with fewer delivery defects. However, Boeing have more work to do to improve quality, reduce delivery delays, and we fully support the initiatives that Dave Calhoun (CEO) and Brian West (CFO) are taking to improve Boeing’s performance and production.
We have reached agreement with SAP Concur to integrate their on-line travel tool with Ryanair’s website. Corporate customers who book directly with Ryanair via Concur can now benefit from significant efficiencies (incl. automated expense & invoice management) in their booking and admin. process. This, coupled with our low fares and high reliability improves our offering to business travellers. We also welcome the recent agreements with Love Holidays and Kiwi (OTAs), which will see their customers book flights directly on the Ryanair.com website, but without inflating Ryanair prices for seats or ancillary products, thereby greatly improving the customer service offering available to both Love Holidays and Kiwi customers.
We expect Europe’s airlines will continue to consolidate over the next 3 years, with the takeover of ITA (Italy) and Air Europa (Spain), as well as the sale of TAP (Portugal) and SAS (Scandinavia) already underway. This, in addition to A320 fleet groundings due to the P&W engine issues and the large backlog of OEM aircraft deliveries is likely to constrain short haul capacity in Europe for the next 3 years. These capacity constraints, combined with our significant cost advantage (incl. FY25 fuel savings), strong balance sheet, low-cost aircraft orders and industry leading resilience, will (we believe) underpin a decade of profitable growth opportunities for Ryanair as we expand our traffic to 300m pax p.a. by FY34.
Q3 FY24 Business review
Revenue & Costs: Q3 scheduled revenues increased 21% to 1.75bn euros. Traffic grew 7% to 41.4m while ave. fares rose 13% to over 42 euros, thanks to a strong Oct. mid-term and peak Christmas/New Year travel (albeit that close-in loads and fares were softer than originally expected due to the sudden removal of Ryanair flights from many OTA Pirate websites in early Dec.). Ancillary revenue increased 10% to 0.95bn euros (c. 23 euros per passenger). Total Q3 revenue rose 17% to 2.7bn euros. Operating costs increased 26% to 2.7bn euros, primarily due to a 35% increase in fuel costs, higher staff costs (reflecting pay restoration, crew, engineering & handler pay increases and higher crewing ratios as we improve ops. resilience) and the earlier timing of maintenance. The widening cost gap between Ryanair and all our EU competitors (which is further enhanced by Ryanair’s low-cost financing and net interest income) remains a growing competitive advantage.
Our Q4 fuel is almost 94% hedged at approx. $89bbl (a mix of forwards and caps) and FY25 hedging has increased to 65% at approx. $79bbl. Almost 90% of Q4 euros/$ opex is hedged at 1.09 and over 70% of FY25 is hedged at 1.11. This strong hedge position protects us from current fuel price volatility and delivers approx. 450m euros savings on fuel already hedged for FY25.
Balance Sheet & Liquidity: Ryanair’s balance sheet is one of the strongest in the industry with a BBB+ credit rating (both S&P and Fitch) and 2.9bn euros gross cash at quarter end, despite 1.9bn euros capex and 1.1bn euros debt repayments. Net cash was 0.15bn euros at 31 Dec., boosted somewhat by the delay of aircraft deliveries into Q4. All of our owned B737 fleet (546 aircraft) are unencumbered, which widens our cost advantage over competitor airlines, many of whom are exposed to high interest rates and rising aircraft lease costs. In Nov. the Board announced the Group’s new Dividend Policy, under which an interim dividend of 0.175 euros per share will be paid on 28 Feb.
Outlook
We continue to target approx. 183.5m FY24 traffic (+9%), despite slightly lower Q3 load factors and Boeing delivery delays. As a result of these lower load factors and higher productivity pay (recently agreed with various pilot unions incl. Belgium, Italy & the UK) to improve operational resilience, we now expect FY24 ex-fuel unit costs to rise by c. 2.50 euros, which still widens the cost gap between Ryanair and our main European competitor airlines. Q4, which is traditionally our weakest quarter, will also be impacted by the partial unwind of free ETS carbon credits (from 1 Jan.). While we will benefit from the first half of Easter traffic falling in late Mar., this is unlikely to fully offset the weaker than previously expected load factors and yields in late Q3 and early Q4. We are therefore narrowing our FY24 PAT guidance to a range of between 1.85bn euros to 1.95bn euros (previously 1.85bn euros to 2.05bn euros). This guidance and the full year result remains heavily dependent upon avoiding unforeseen adverse events in Q4 (such as the Ukraine war, the Israel-Hamas conflict and further Boeing delivery delays).”
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
