Ryanair marks record profits
Irish budget airline company Ryanair marks record #profits.
However, having less #planes than expected, they will have to put the cap of their #flights lower than initially anticipated.
However, having less #planes than expected, they will have to put the cap of their #flights lower than initially anticipated.
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NewsTranscript
00:00 Europe's largest budget airline Ryanair has posted a record full year profit of
00:05 just over two billion dollars. That's a 34% rise on the previous year and while
00:10 the results were better than expected the Irish carrier warned that fare sales
00:14 across its network this summer would now only be flat or modestly ahead of last
00:19 year down from a previous forecast of 10% increase. The company also
00:23 said it would be 23 jets short of the number Boeing was due to deliver by the
00:28 end of July with the risk of further late deliveries. Well the news pushed
00:33 Ryanair's share price down around 1.6% on the euronext however it's still up
00:39 more than 17% on the year. Well John Strickland is an independent aviation
00:44 business strategist and he joins us now to tell us a bit more about all of this.
00:47 Welcome back to the program John. So what's what's going on here? This is good
00:51 news perhaps for consumers and holidaymakers getting maybe cheaper
00:54 tickets than they were expecting this summer. Well this is a line that Michael
00:58 O'Leary has been communicating today but it is a benefit for consumers and fares are
01:02 going to be a little bit softer than expected but what we should do is put it
01:06 in context. Of course coming out of Covid as airlines began to fly summer 21
01:11 summer 22 we talked about pent-up demand people were flying almost at any price
01:16 capacity was quite limited and fare levels were going up to levels not seen
01:21 previously. I think it was probably quite ambitious to expect fares would
01:25 go up substantially again a third year in a row so what we've heard from
01:28 Ryanair today is the current quarter running through till the end of June is
01:35 relatively soft. We also need to remember Easter fell in this quarter last year
01:40 this time around it doesn't but the real peak period July August September when
01:45 scores on holiday is looking stronger or be there as we've just been saying
01:49 that was not quite as high as expected but it's still pretty positive from an
01:54 airline point of view. We've seen similar commentary from EasyJet, demand looking
01:59 strong but people are not really prepared to pay that much more. So where
02:03 do you see demand going and have we really seen the end of the so-called
02:07 staycation which of course we saw just after Covid people having their
02:11 holidays domestically are people really now much more keen to get overseas and
02:16 spend their summer holidays in the Sun? Well people are still traveling as
02:20 strongly when Ryanair is seeing volume growth Ryanair is adding aircraft to its fleet as
02:24 is EasyJet. Of course the backdrop for the industry is a shortage of capacity
02:30 Ryanair will be about 20 aircraft or so light at work expected to be so it can't
02:36 resource maybe as much demand as it would wish to. That's similarly the case
02:40 with Wizz Air who we're reporting on Thursday. They in particular have a
02:44 larger problem about a quarter of their fleet or close to a quarter of their fleet is
02:48 currently grounded. They fly Airbus aircraft powered by Pat and Whitney
02:52 engines which are having to go extensive maintenance repairs due to under
02:57 performance of a particular type of engine. But demand is pushing up
03:02 against the buffers with airlines like those two and indeed other carriers in the
03:07 market. But there are always unknown factors. We've had a pretty wet spring
03:11 certainly in northern Europe that's pushed people to fly more. We've got
03:15 perhaps a wild card even at the Olympics in the summer this year which some
03:19 people may decide to stay at home there. And also factoring into consumer
03:23 consideration is not just the price of tickets but of course everything about a
03:27 holiday. We've seen increases in restaurant costs, increases in hotel prices not to
03:32 mention the cost of living generally. So while people may not be traveling less
03:36 they are very much more focused on how much they can afford to spend on those
03:40 much sought holidays. And let's talk a little bit more about those aircraft
03:44 capacity issues. How big a problem is Boeing's delay in aircraft deliveries
03:49 for the broader European airline industry and do carriers simply not have
03:53 enough planes and is there any sign of that improving soon? Well it's a
03:57 significant problem. Actually Ryanair is the one who's hit most because they have
04:01 an all Boeing fleet. They've got over 550 aircraft in their fleet. They were
04:07 expecting to take delivery of about 40 to 50 or so additional Boeing 737 MAXs
04:14 this summer. As I mentioned there will be about 20 light of that figure. They're
04:18 going to have to take some later in the summer than expected which is not
04:22 really terribly valuable because at peak it's past Ryanair but they've been able to make full
04:26 advantage of that capacity. Other airlines around Europe are less impacted. Not so
04:31 many have large fleets of Boeing aircraft as far as short flights are
04:35 concerned. But then the Airbus problem is much more prevalent. Whistler as I
04:39 mentioned with a fleet of about 160, 170 aircraft currently has a quarter of them
04:45 grounded. Other airlines for example Vueling in the IAG group. Lufthansa is
04:51 another that have aircraft powered by these Horton Windy engines. So those aircraft are
04:56 not available. The manufacturers talked about downtime per aircraft in a region
05:01 of 350 days. So that's the best part of the year to get those engines fixed on those
05:06 aircraft. And Airbus already did have delivery delay challenges anyway
05:10 alongside Boeing. So that keeps capacity pretty tight and it doesn't look like a
05:15 problem that's going to go away quickly. So it's going to continue to vex airlines not
05:19 just in the months ahead but probably running into next year as well.
05:22 Okay John we always appreciate your insights. Thank you very much indeed.