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Monday, June 5, 2023

Ryanair posts full-year loss of €355 million

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Ryanair Holdings reported a full-year loss of €355 million (pre-exceptionals), down from €1,015 million the year before.

Revenues are expected to climb by 156 percent to €2.65 billion in FY22. While traffic increased from 27.5 million to 97.1 million visitors, the EU Covid-19 travel restrictions were not lifted until July 2021 (October in the case of the UK government), which, combined with the negative impact of the Omicron variant and Russia’s invasion of Ukraine in H2, necessitated significant fare price stimulation. In FY22, average fares dropped by 27% to just €27.

As traffic improved and passengers increasingly chose priority boarding and reserved seating, ancillary revenue performed well, producing more than €22 per person. To €4.80 billion, total revenues surged by over 190 percent.

While traffic increased by 253 percent and sectors increased by nearly 200 percent, operating costs rose only 113 percent to €5.27 billion (including a notable 237 percent increase in fuel to €1.83 billion), owing to lower variable costs such as airport and handling, route charges, and lower fuel burn as 61 Boeing B737 Gamechangers entered the fleet (offset by the higher cost jet fuel).

Lower costs combined with higher load factors resulted in a unit cost per passenger of €35 in FY22 (ex-fuel).

The company’s fuel needs for FY23 are approximately 80% hedged (65% jet swaps at c. US$63bbl and 15% caps at c. US$78bbl). Almost 10% of Ryanair’s fuel requirements for the first half of FY24 are hedged at around US$76 billion (via jet swaps).

For FY23, carbon credits are 85% hedged at €53 (far below the current market price of over €90).

This substantial fuel hedging position gives Ryanair a significant competitive advantage for the next 12 months, allowing it to significantly increase market share.

Ryanair expects to increase traffic to 165 million passengers in FY23 (up from 97 million in FY22 and 149 million pre-Covid) by pursuing its load active, yield passive approach.

While 80 percent of Ryanair’s fuel requirements are hedged at much below current spot prices of over US$100 billion, the remaining 20% will result in unanticipated cost rises.

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