Ryanair flies back into profit and warns of higher prices ahead

·2-min read
Profit has taken off at the Irish budget carrier after the end of Covid restrictionsNicholas.T.Ansell/PA) (PA Wire)
Profit has taken off at the Irish budget carrier after the end of Covid restrictionsNicholas.T.Ansell/PA) (PA Wire)

Soaring demand for flights after the end of pandemic travel restrictions sent Ryanair back into profit today, as the champion of low fares warned of rising prices into a busy summer getaway season.

The Irish carrier pointed out that capacity on European short-haul services was recovering more slowly than demand, meaning that travellers would be paying more for their getaways.

That boosted its shares, leaving Michael O’Leary, its chief executive on course for a €100 million (£87 million) performance-related payday, triggered by the stock, or headline profit.

Ryanair reported a near-record annual profit of €1.43 billion (£1.24 billion), after a loss of €355 million for 2022. That helped its shares gain altitude, up €3.30 to €15.98.

O’Leary’s deal kicks in if the stock exceeds €21 for 28 days between before the end of March 2024, or if profit after tax reaches €2 billion. He can cash in 10 million share options priced at €11.12.

Holiday-hungry travellers could help him get there.

Ryanair said today that fares were already up 10% on pre-Covid levels and forward bookings into the summer were “strong”, adding: “we continue to urge all customers to book early to avoid rising ‘close-in’ prices,” a term for fares costing more when booked nearer to departure times.

Ryanair flew almost 170 million passengers last year, which was up almost three-quarters on last year and was a record.

It also benefited from fuel hedging, which helped it avoid the worst of the impact of high oil prices in the year after Russia’s invasion of Ukraine by locking in better prices in advance. Nonetheless, the cost of fuel still more than doubled to just under €4 billion.

While the carrier hit some turbulence at its London Stansted hub as people returned to the skies after the lockdown years, it was widely praised in the industry for avoiding the scenes of chaos at other airports.

Ryanair tended to keep staff on its books during the pandemic, meaning it could scale its operations back up more quickly than rivals. It escaped the extent of delays and cancellations seen at other airports, most visibly Heathrow, which became known as “the flightmare” and led to ticket sales restrictions there throughout the summer.

Ryanair’s robust return to the skies  arrived on its bottom line today. The proportion of seats sold on its flights reached 93% over the year and its near-record profit came from revenue that more than doubled to almost €11 billion.

Victoria Scholar, head of investment, at Interactive Investor called the numbers “impressive”, and pointed to more to come: “Despite cost-of-living pressures, which have hurt discretionary spending, individuals and households appear to be prioritising their summer holidays.”

The market for flights looks set to stay tight. Ryanair predicted a “backlog” of plane deliveries means capacity growth would “constrain capacity growth … for at least four more years”.