By Padraic Halpin
DUBLIN (Reuters) – Ryanair aims to boost profit by 10% this year after almost record earnings for its last financial year, CEO Michael O’Leary said on Monday, and it may do better if rival airlines’ “irrationally exuberant” summer fare forecasts are right.
Europe’s largest airline by passenger numbers said it expects 10% traffic growth this year to more than offset a 1 billion euro ($1.1 billion) fuel bill rise as it posted slightly better than expected post-tax profit of 1.43 billion euros.
O’Leary said robust demand showed customers were treating travel as essential this summer and that fares would grow by a double digit percentage. However, he was not sure if they would hit the 20% to 30% range competitors are forecasting.
“If traffic is growing by 10%, we aim to deliver that type of profit growth as well. It could be better than that if our competitors are correct,” O’Leary said on an analyst call.
“30 years of pain in this industry has taught me to be cautious when my competitors are irrationally exuberant.”
Ryanair shares, up 27% so far this year, were 2.5% higher by 1145 GMT.
The low cost carrier stands to gain more from rising fares due to plans to operate 25% more flights than pre-COVID levels in the peak summer months when European short-haul capacity is set to be 5-10% below pre-pandemic levels.
O’Leary cautioned that he was not entirely sure if demand would remain strong with consumer spending strained and that winter and early 2024 may be more challenging.
However, a large backlog of aircraft deliveries is likely to constrain European capacity growth for at least four more years and create “enormous growth opportunities” for Ryanair as it adds 110 new Boeing jets over the next three summers.
Boeing delivery delays could push some of its growth into the lower yielding second half of this year and require capacity to be trimmed judiciously, he said, with the carrier expecting to be short of up to 10 new jets in June and July.
Finance chief Neil Sorahan told Reuters that the Irish airline remained comfortable it would increase passenger numbers to 185 million from a record 168.6 million in the past financial year.
The delivery delays could potentially reduce first-half passenger numbers by 750,000, he said.
O’Leary expects all the aircraft needed for summer 2024 to arrive by the end of next May or early June and that deliveries will be “smoother” next summer.
Ryanair’s full-year post-tax profit beat the 1.4 billion euros analysts expected, as well as its own forecasts and almost topped the record 1.45 billion euros achieved in 2018. It said a large chunk was due to being “fortuitously” hedged on fuel cost.
The company made a loss of 355 million euros in last year’s pandemic-hit financial year but its turnaround.
($1 = 0.9084 euros)
(Reporting by Padraic Halpin; Editing by Shailesh Kuber, David Goodman and Alexander Smith)