Ryanair said it was experiencing a “strong rebound of pent up travel demand into August and September”
Shares in the budget airline, Europe’s largest, rose 3.8% in Dublin trade despite a loss of €273m in its normally profitable first quarter.
Fares were also a third lower than in the same period of 2019 before the pandemic.
In May the airline forecast that it would fly between 80 million and 100 million passengers in the 12 months to the end of March 2022, compared to a pre-pandemic peak of 149 million.
But Ryanair adjusted that today to between 90 million and 100 million and O’Leary told analysts that, without disruption, it will be at “the upper end of that range”.
A surge in summer bookings has lifted passenger numbers from one third of 2019 levels in June to almost two thirds in July at about 9 million.
Michael O’Leary said he expects to fly about 10 million passengers in each of the last five months of the year, boosted by pent-up demand from individuals and businesses, bringing it to roughly 90% of 2019 levels in November.
“If you haven’t met your suppliers for the last 18 months you need to get back and see them. If you haven’t made the sales calls, you’re not gonna do that on Zoom,” Mr O’Leary said.
Ryanair flew 27.5 million passengers in the year to March 2021. Michael O’Leary said he expects to exceed 2019 traffic levels of 149 million next year.
The collapse of some rivals and capacity cuts planned by others are likely to reduce European short-haul capacity by about 20% over the next two years, the group CEO said.
That will allow Ryanair, which is due to take delivery of 200 Boeing MAX jets over the next four years, to expand rapidly while increasing fares, he said.
The first 10 of those planes, which were delivered in recent weeks, are performing “spectacularly”, he said.
“I don’t think, certainly in my 30 years in this industry, post 9/11, post Cold War, there has never been a growth opportunity in front of Ryanair such as we have at the moment,” O’Leary said.
The number of its flights serving primary rather than small regional airports is likely to increase to 80% from 70% currently, he said.
Ryanair Group CEO Michael O’Leary
Ryanair is in talks with Boeing about a new order of the larger MAX 10 but wants lower prices before signing the deal, Michael O’Leary said.
Ryanair’s average fare was €24 in the April-June quarter, down from €36 in the same time of 2019.
Revenue for optional extras grew, however, increasing to €22 from €19 as cautious passengers paid to choose their seats and board more quickly.
The average number of empty seats is likely to fall from 27% in the April-June quarter to a more normal level of less than 10% early next year, Ryanair’s finance chief Neil Sorahan said.
Ryanair, which has one of the strongest balance sheets in the airline industry, said it had cash reserves of €4.06 billion, up from €3.15 billion at the end of March following a €1.2 billion bond sale in May.
Mr O’Leary said he did not expect to distribute any cash to shareholders over the next year or two due to large capital expenditure on an order of 210 Boeing MAX200 jets, which he said were performing better than expected since they entered the fleet last month.
He also said it remained impossible to provide a meaningful profit forecast for the financial year to end-March 2022, but reiterated that the airline was cautiously expecting to post a small loss or break even.
“We are seeing a strong rebound of pent up travel demand into August and September and we expect this to continue into the second half of full year 2022, with pre Covid-19 growth planned to resume strongly in summer 2022,” the airline said.
Rival EasyJet last week said it hoped to ramp up capacity to 60% of 2019 levels in the July-September quarter.
Ryanair may order Boeing MAX 10 this year but only at the ‘right price’
Ryanair could place a significant order for Boeing’s MAX 10 aircraft this year but only if the price is right as the airline is not under any time pressure, its chief financial officer said today.
A large order from Ryanair, Boeing’s largest European airline customer, would provide a major boost to the MAX, which was grounded for 20 months after two fatal crashes.
Ryanair is already the largest European customer for the MAX, with 210 firm orders of the 197-seat MAX200 model.
It has repeatedly said it is interested in a significant order of the larger 230-seat MAX 10, which took off on its maiden flight in June.
“Maybe the back end of the year we will do something. Maybe not. It’s all predicated on price,” Mr Sorahan told Reuters in an interview on the publication of the airline’s results for its April-June quarter.
“If the price is right, we’re interested but it’s a post FY26 time frame so we are under no time pressure there,” he said, referring to the airline’s financial year to March 31, 2026, when its current order ends.
In a presentation to investors, Mr O’Leary said the MAX 10 was something the airline would “revisit with Boeing maybe towards the end of the year”.
“We think the MAX 10 is a great aircraft, but you know we are very disciplined in Ryanair we will only place orders when we think the price is right,” he added.