Ryanair’s shares fell by 2pc after CEO Michael O’Leary attributed slower-than-expected growth in airfares to a “recessionary feel around Europe,” despite the airline posting record annual profits slightly above expectations.
O’Leary had previously warned that summer fares would likely be lower than the forecasted 5pc to 10pc rise, with the new forecast of flat to modest price growth heavily relying on last-minute summer bookings.
Mr O’Leary told a briefing in the aftermath of the full year and Q4 results to end March: “I’ve already said, summer 2024 demand is positive. We’re running our largest-ever summer schedule and expect to deliver 8pc traffic growth through the peak summer months in a market where EU capacity is constrained due to Pratt & Whitney engine repairs, OEM delivery delays, and consolidation. It has been a little bit surprising that pricing hasn’t been stronger, and we’re not quite sure whether that’s due to consumer sentiment or a recessionary feel around Europe. However, we still see peak travel demand being strong through July and August. If we have to discount or cut fares to achieve a 94pc load factor in April, May, and June, then so be it.”
“We are continuing to work with Boeing to improve quality and accelerate our 737 deliveries. There is an outside possibility that the backlog might be reduced to 20 instead of 23 by the end of July, but this won’t significantly alter the traffic growth figures for this year.”
“I think the key message this morning is that we’ve already hedged 70pc of our FY25 fuel at $79 a barrel, locking in a €450 million saving. One of the significant developments over the last three months has been the number of approved OTA deals we’ve signed, converting OTA pirates from scamming consumers into protecting them and ensuring that consumers get Ryanair’s lowest fares.”
Ryanair shares, along with those of rival EasyJet, fell following Mr O’Leary’s warning on May 7, and they were lower in Dublin trade today due to the cautious outlook.
Delays in new aircraft deliveries and spare parts have constrained capacity in Europe, but Ryanair’s average fares still rose by 21pc for the financial year ending March 31.
The airline, Europe’s largest by passenger numbers, will be 23 aircraft short of Boeing’s scheduled deliveries by the end of July, though additional deliveries may occur if the Boeing production team improves consistency.
Ryanair flew a record 184m passengers by the end of March, contributing to a 34pc year-on-year profit increase to €1.92 billion, slightly ahead of analyst expectations; the airline also announced a €700m share buyback, its first since the Covid-19 crisis.
