Ryanair boast strong festive trading as budget airline swings to a profit

Ryanair Holdings plc (LON:RYA) have reported strong festive trading on Monday morning, as shares have sustained in green.

Across its third quarter, which included the festive period the budget airline reported a profit which teased shareholder’s excitement.

Notably, Ryanair saw a loss last year and the update today certainly shows progress in what seems to be a volatile airline industry.

In the three month period to December 31 –  the airline firm recorded operating profit of €91.3 million, compared to a loss of €68.0 million for the same period a year before.

Additionally, the firm saw traffic rise 6% giving a total of 36 million customers.

Notably, total operating revenue in the third quarter was up 21% year on year to €1.91 billion from €1.58 billion. Traffic rose 6.2% to 35.9 million, while revenue per passenger grew 13%. Additionally, the budget airline saw its load factor increase by 1% from 95% to 96%.

Looking at total operating expenses, Ryanair noted that these increased by 9.7% to €1.81 billion from €1.65 billion.

Ryanair said “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.”

Adding “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.”

Looking forward, the firm remained confident despite operational and productional delays from Boeing (NYSE:BA).

Ryanair said that the first deliver of new MAX aircrafts will not arrive till September or October 2020, however these have been dubbed as “game changer” aircraft giving 4% more seats with 16% less fuel burn.

Speaking on Boeing delivery timeframes, the budget airline said “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.”

Guiding forward, the firm remained confident about their ability to deliver results in a tough market saying:

“As announced on 10 Jan., Ryanair’s FY20 PAT guidance has risen to a range of €0.95 billion to €1.05 billion 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 154 million 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 €440 million 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.”

November passenger figures

Ryanair saw their passenger numbers climb across November, which was one of many reasons why the firm swung to a profit in the four month period.

November traffic rose by 4.0% year-on-year to 10.5 million from 10.1 million and in Lauda, by 67% to 500,000 from 300,000 last year.

Notably, this came after a cut in production and profit estimates and a series of slow updates where the airline industry had been hit by external shocks.

Boeing delays weigh on Ryanair

In December, Ryanair announced that they had intentions to close two more bases following a shortage of Boeing 737 MAX aircrafts being delivered.

Ryanair said it now expects to receive just 10 MAX aircraft rather than 20 as previously predicted.

The Irish budget airline said that as a result of the aircraft delivery delays, it has cut its traffic growth forecast for the year to March 31, 2021, by 0.6% to 156 million passengers from 157 million.

Receiving just half the 737 MAX aircraft means Ryanair will also close two more bases in summer 2020, in Nuremberg, Germany, and Stockholm Skavsta, located roughly 100 kilometres from the Swedish capital.

Certainly, the production delays are not just weighing up on Ryanair but many competitors as well.

Despite these delays, it seems that Ryanair have managed to pull a rabbit out of the hat, and have given shareholders a very impressive update on Monday.

Shares in Ryanair trade at €15 (+4.51%). 3/2/20 11:06BST.

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