About the company

Ryanair is an Irish airline operating in Europe and North Africa. It currently flies to 232 destinations in 37 countries and operates around 3,600 daily flights.[1] It is one of the largest and most successful low-cost airlines in the world, known for its easy access to air travel, while generating additional revenue through a variety of optional extra service charges. Ryanair has played a significant role in the development of the aviation industry by making flying more accessible to a wider public for whom it was a luxury in the past.

Aircraft deliveries are tied up

Boeing was due to deliver 57 of 737 MAX 8200s by the end of April, but Ryanair was recently informed that the manufacturer is so far only able to deliver 50, and even then only by the end of June. In fact, according to the airline's boss, they don't even know how many planes they will eventually receive. These delays could increase ticket prices by 5-10% during the 2024 summer season, while the airline may have to make minor adjustments to its flight schedules, which could mean that it could carry only 200 million passengers over the 12-month period starting in April, compared to the 205 million passengers it had planned to carry. Despite the unavoidable costs, O'Leary assured that ticket price increases would not be as high as the 17% increase in 2023.

Crisis at Boeing

O'Leary expressed disappointment at Boeing's unfulfilled promises and criticised the standards put in place as part of quality control. The backdrop to these delays lies in tighter controls on production lines following a dangerous incident in January that led to the temporary grounding of all 737 MAX aircraft. According to Reuters sources, Boeing has also announced delivery delays to other airlines, indicating an increasingly significant production problem at the global manufacturer. There have been problems with MAX models in the past, when a technical shortage caused 2 fatal aviation accidents in 2018 and 2019, which resulted in these machines being grounded for 20 months.[3][4]

Economic results

In late January, Ryanair announced its economic results for the third quarter of fiscal year 2024, the period from October 1 to December 31, 2023. The company's revenue was $2.7 billion, a 16.72% year-on-year increase over the same period, but net profit was $14.8 million, a sharp year-on-year decline of up to 92.7% compared to the $202.1 million profit for the third quarter of fiscal 2023 (October 1 to December 31, 2022). This decline was mainly due to the removal of various pirate sites that offered several times more expensive tickets during the Christmas and New Year holidays. Fiscal year 2024 runs from April 1, 2023 to March 31, 2024, with results for this period to be reported in May. Fiscal year 2023 revenue was $10.74 billion with a 124.4% year-over-year increase, and net income was $1.31 billion. At that time, the company recovered for the first time in 2 years from the losses suffered during the Covid-19 pandemic. [5][6]

Ryanair's share price development over the last 5 years. (Source: Google Finance)*

Expansion hopes in Poland

With the arrival of a new government in Poland, Ryanair is counting on more support for its growth and would like to double its presence in the country over the next 6 to 8 years. The carrier plans to increase passenger numbers here by 10% during 2024, as well as new routes. O'Leary stressed that in order to realise these ambitions, the country needs to complete its aviation infrastructure, and he spared no criticism of the former Polish government, such as their plan to build a so-called "central airport" in the centre of the country, describing the idea as "stupid and belonging to the days of communism. [7]

Conclusion

The company expects strong demand during the summer of 2024, with slightly higher prices than in 2023. The goal is to reach 200 million passengers per year, with an expected increase of 2% to 3% in revenue per passenger. Ryanair has a strong position in Europe in terms of growth and profitability, with a significantly larger fleet than the competition. Despite some challenges, it is certain that the airline will focus on cost control, fleet expansion, shareholder confidence and can take steps to ensure sustainable growth for the future. [1]

Adam Austera, Senior Analyst at Ozios

* Past performance is no guarantee of future results.

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.

[1] https://www.investing.com/news/stock-market-news/ryanair-looks-for-polish-government-support-for-ambitious-growth-3286793

[2] https://corporate.ryanair.com/about-us/our-network/

[3] https://www.bbc.com/news/business-68398421

[4] https://edition.cnn.com/2024/02/21/business/boeing-removes-head-of-737-max-program-in-wake-of-safety-incidents/index.html

[5] https://www.google.com/finance/quote/RYAAY:NASDAQ?window=5Y

[6] https://www.investing.com/news/stock-market-news/earnings-call-ryanair-reports-q3-profit-updates-on-ota-partnerships-93CH-3286699

[7] https://www.investing.com/news/stock-market-news/ryanair-looks-for-polish-government-support-for-ambitious-growth-3286793