Ryanair Holdings plc today (3 Feb.) reported a Q3 profit of €88m, compared to a €66m loss in the same quarter last year. Highlights include:
- Traffic grew 6% to 36m guests.
- Revenue per guest rose 13% (9% higher fares; ancillary rev. up 21%).
- Over 90% of flights arrived on-time (excl. ATC delays).
- 111 new routes announced for S.20.
- Director of Sustainability appointed to drive our Environmental Policy.
- Over €440m returned to shareholders under €700m buyback programme.
EUROPE’S GREENEST, CLEANEST AIRLINE:
The future of our planet is of vital importance to our customers and all our people. Ryanair has the lowest carbon emissions of any major EU airline at just 66 grams of CO₂ per passenger km. Passengers switching to Ryanair can halve their CO₂ emissions compared to other major EU airlines. In Dec. 2019, Ryanair appointed a Director of Sustainability to deliver the Group’s ambitious sustainability targets.
Ryanair operates the youngest fleet, with the highest load factors, and newer more fuel-efficient engines. Our Environmental Policy commits us to:
- Be plastic free in 5 years;
- Cut noise emissions by up to 40% per seat;
- Cut CO₂ emissions by 10% by 2030 (up to 50% lower than other major EU airlines);
- Encourage guests to support our voluntary carbon offset programme;
- Work with environmental partners to improve our environment in Europe.
While aviation generates just 2% of Europe’s CO₂, our industry must work harder to further cut these low emissions. EU airlines already pay excessive environmental taxes – Ryanair will pay over €630m in such taxes this year. For further info. click here: www.ryanair.com/environment.
Sales grew 21% to €1.91bn. Better than expected Christmas and New Year bookings, at higher fares, led to a 16% increase in Scheduled Revenue to €1.19bn as we carried 36m guests at 9% higher fares. Ancillary Revenue increased by 28% to €0.72bn as more guests choose Priority Boarding and Preferred Seat services. In Oct., Ryanair Labs launched a new digital platform with improved, personalised, guest offers. Labs are now focused on improving penetration across key ancillary products over the coming quarters. Rentalcars.com became our new car hire partner in late 2019 and will help grow car hire penetration and revenue over the next 3 years.
Our fuel bill rose 14% (+€83m) to €0.7bn due to higher prices and 6% traffic growth. Ex-fuel unit costs rose by 1% due to higher staff (increased pilot pay, higher crew ratios as pilot resignations have slowed to almost zero) and maintenance costs (older aircraft longer in the fleet due to the Boeing MAX delivery delays), offset by falling EU261 costs due to improved punctuality. Our fuel is 90% hedged for FY20 at $71bbl and 90% of our FY21 fuel is now hedged at $61bbl, delivering over €100m fuel savings into FY21. We continue to negotiate attractive growth deals as airports compete to win Ryanair’s very limited traffic growth.
The Group airlines continue to grow. In Q3 Buzz increased its fleet to 32 B737s and expanded outside Poland with new bases in Prague and Budapest. Buzz will grow its fleet to 50 B737s for S.20, with 7 aircraft in Polish charter operations and 43 operating scheduled flying for Ryanair.
Lauda continues to underperform with fares much lower than expected, despite strong traffic growth and high load factors. As announced on 10 Jan., this is a direct result of intense price competition with Lufthansa subsidiaries in both Germany and Austria. While Lauda will now carry 6.5m guests in FY20, average fares are well below those of other Group airlines. Lauda’s management is implementing a new cost cutting plan and is improving penetration on ancillary products. Lauda will grow its fleet from 23 to 38 A320s by S.20 with increased capacity in Vienna and a new base in Zadar.
Malta Air continues to grow strongly and has taken over the Group’s French, German, Italian and Maltese bases. Its fleet will grow to 120 aircraft by S.20.
Ryanair DAC saw its fleet reduced to 360 B737s in Q3 as both Buzz and Malta Air took over more flight operations for the Group. Armenia became the newest destination in Jan. Regrettably the Boeing MAX delivery delays mean that Ryanair DAC had to close a number of loss-making winter bases leading to some crew redundancies in Spain, Germany and Sweden. We have endeavoured to minimise job losses through base transfers & seasonal bases and continue to work with our people, their unions and our airports to finalise this process.
Boeing MAX update
Delivery of the Group’s first Boeing 737-MAX-200 aircraft has been repeatedly delayed from Q2 2019. It is now likely that our first MAX aircraft will not deliver until Sept. or Oct. 2020. The requirement for MAX simulator training will also slow down the delivery of backlogged aircraft and new deliveries. But we believe that these “gamechanger” aircraft (with 4% more seats, burn 16% less fuel), when delivered, will transform our cost base and our business for the next decade. Due to these delivery delays, we won’t see any of these cost savings until late FY21. As a direct result of these delivery delays, we plan to extend our 200m p.a. passenger target by at least one or two years to FY25 or FY26.
Balance Sheet & Shareholder Returns
Ryanair’s BBB+ rated balance sheet is one of the strongest in the industry. 70% of our aircraft are debt free. This allows us to grow while weaker airlines collapse, sell or retrench in the current challenging market. We have returned €440m to shareholders under our current €700m share buyback programme. Despite the share buyback and the impact of IFRS 16 (€230m), net debt was just over €700m at period end. Due to the uncertainty surrounding the Boeing MAX aircraft deliveries, peak Capex and maturing bonds in 2021, the Board has decided to extend the current €700m buyback programme until the end of July.
As announced on 10 Jan., Ryanair’s FY20 PAT guidance has risen to a range of €0.95bn to €1.05bn thanks to stronger Christmas and New Year travel bookings, at better than expected fares. Q4 forward bookings are 1% ahead of this time last year at slightly better than expected average fares and we now expect full year traffic to grow by 8% to 154m guests. Ancillary revenues continue to grow, but at a slower rate having annualised the cabin bag changes in Nov. This will support full-year revenue per guest growth of between +3% to +4%. The full year fuel bill will rise by €440m and ex-fuel unit costs will increase by approx. 2%. On the basis of current trading, Ryanair expects to finish close to the mid-point of the new PAT guidance range. This guidance is heavily dependent on close-in Q4 fares and the absence of any security events.