Ryanair Holdings plc today (22 July) reported Q1 profit of €360m, compared to a prior-year Q1 PAT of €663m, as strong traffic growth (+10%) to 55.5m customers, was offset by half of Easter falling into PYQ4 and weaker than expected air fares in the quarter

Q1 Highlights include:

• Traffic grew 10% to 55.5m, despite multiple Boeing delivery delays.
• Rev. per pax fell 10% (ave. fare down 15% & ancil. rev. flat).
• 156x B737 “Gamechangers” in 594 fleet at 30 June (20 less than budget).
• Record Summer schedule launched (5 new bases, over 200 new S.24 routes).
• Multiple “Approved OTA” partnerships signed to protect consumers.
• Fuel hedges extended: 75% FY25 at under $80bbl saves over €450m & c.45% FY26 at $78bbl.
• Over 50% of €700m share buyback completed.

Ryanair Group CEO Michael O’Leary, said:

ENVIRONMENT:

“Ryanair is Europe’s No. 1 rated airline for ESG by Sustainalytics, and enjoys industry leading ratings from both MSCI (A) and CDP (A-).  Our new aircraft and increasing use of SAF has positioned Ryanair as one of the EU’s most environmentally efficient major airlines.  During Q1 we took delivery of 10x B737-8200 “Gamechangers” (4% more seats, 16% less fuel & CO2) and continued to retro-fit winglets to our B737NG fleet (target 409 by 2026), reducing fuel burn by 1.5% and noise by 6%.  In April we extended our partnership with Trinity College Dublin’s Sustainable Aviation Research Centre (“TCD”) to 2030.  TCD’s facility supports the acceleration of SAF deployment, and funds important non-CO2 research.  Recently proposed EU legislation confining the monitoring of aviation’s non-CO2 impact to only intra-EU flights (yet again exempting long haul flights, which account for the majority of EU aviation emissions) is indefensible and undermines the EU’s green agenda and credibility.  We call on the EU Commission to adopt a “polluter pays” principle and to end the indefensible exemption of polluting long-haul flights from EU enviro. regulation.

In the last 10 days of June we suffered a significant deterioration in European ATC capacity which caused multiple flight delays and cancellations, especially on first wave morning flights, making it more urgent than ever that the new EU Commission and Parliament deliver long delayed reform of Europe’s hopelessly inefficient ATC services.  This can be achieved by properly staffing of Europe’s ATC services and protecting overflights (during national strikes) which would deliver revolutionary environmental improvements in EU air travel.

FLEET & GROWTH:

The Ryanair Group had 156x B737 Gamechangers at 30 June and we expect to increase this to over 160 by the end of July (20 short of our contracted S.24 deliveries).  We continue to work with Boeing (Stephanie Pope & Brian West) and have noted an improvement in the quality and frequency of deliveries during Q1.  While there remains a risk that Boeing deliveries could slip further, our focus has now turned to ensuring timely delivery of our remaining 50 Gamechangers ahead of S.25.

This summer we’re operating our largest ever schedule with over 200 new routes (and 5 new bases) as we deliver as much low fare growth as possible for our passengers and airport partners in FY25.  We’ve launched a new Tangier base and, following Calabria’s recent decision to abolish the Municipal Tax at its regional airports, we will base a second aircraft in both Reggio Calabria (from W.24) and Lamezia (for S.25). To facilitate this growth, Lauda has extended op. leases on 3 of its A320s to 2028.  We will also continue to take delivery of B737s through Aug. and Sept. even though we will be unable to schedule these aircraft for peak Summer flights.

We expect European short-haul capacity to remain constrained for some years as A320 operators work through significant P&W engine repairs, OEMs struggle with delivery backlogs, and airline consolidation continues, including Lufthansa’s recently approved takeover of ITA (Italy), IAG’s delayed takeover of Air Europa (Spain) and the upcoming sale of TAP (Portugal).  These capacity constraints, combined with our significant unit cost advantage, a strong balance sheet, low-cost aircraft orders and industry leading OTP, will underpin a decade of low-fare profitable growth to 300m passengers by FY34. 

Q1 FY25 BUSINESS REVIEW:

Revenue & Costs:

Q1 scheduled revenue fell 6% to €2.33bn.  While traffic grew 10% to 55.5m, our customers enjoyed substantial savings thanks to 15% lower fares due, in part, to the absence of the first half of Easter which fell into March, and more price stimulation than we had previously expected.  Ancillary sales rose 10% to €1.30bn (c.€23.40 per passenger).  As a result, total revenue declined 1% to €3.63bn.  Operating costs increased 11% to €3.26bn, marginally ahead of traffic growth, as fuel hedge savings offset higher staff and other costs which was in part due to Boeing delivery delays.

Our FY25 fuel volumes are 75% hedged at just under $80bbl and 85% of €/$ opex is hedged at $1.11, locking in over €450m savings.  We have taken advantage of recent oil price weakness to increase our FY26 fuel hedging to almost 45% at c.$78bbl.  This strong hedge position helps insulate the Group from significant fuel price volatility.

Balance Sheet & Liquidity:

Ryanair’s balance sheet is one of the strongest in the industry with a BBB+ credit rating (both S&P and Fitch) and €4.49bn gross cash at quarter end, despite €0.50bn capex and €0.25bn share buybacks. Net cash increased to €1.74bn at 30 June (€1.37bn at 31 Mar.). Our owned B737 fleet (566 aircraft) is fully unencumbered, widening our cost advantage over competitor airlines, many of whom are exposed to expensive lease and financing costs.

SHAREHOLDER RETURNS:

A €700m share buyback commenced in May.  To date we have completed over 50% of the programme.  When complete, Ryanair will have returned over €7.8bn to shareholders since 2008.  A final dividend of €0.178 per share is due to be paid in Sept.

Ryanair’s ADSs are traded on NASDAQ.  Following a recent review, the Board has approved a change to the ADS ratio so that one ADS will equal two Ordinary Shares, a 2:1 ratio (currently 5:1).  This change will be formally announced, and implemented, in the coming weeks and requires no action from ADS holders.  The purpose of the change is to bring the Ryanair ADS price broadly in line with current market norms.  As the ADS price will be reduced, they should be more attractive to new investors which potentially will increase ADS liquidity.  

OUTLOOK:

FY25 traffic is expected to grow 8% (198m to 200m passengers), subject to no worsening Boeing delivery delays.  As previously guided, we expect unit costs to rise modestly this year as ex-fuel costs (incl. pay & productivity increases, higher handling & ATC fees and the impact of multiple B737 delivery delays) are substantially offset by our fuel hedge savings, and rising net interest income, which widen Ryanair’s cost advantage over its competitors.  While Q2 demand is strong, pricing remains softer than we expected, and we now expect Q2 fares to be materially lower than last summer ( previously expected to be flat to modestly up).  The final H1 outcome is, however, totally dependent on close-in bookings and yields in Aug. and Sept.  As is normal at this time of year, we have almost zero Q3 and Q4 visibility, although Q4 will not benefit from last year’s early Easter.  It is too early to provide meaningful FY25 PAT guidance, although we hope to be able to do so at our H1 results in Nov.  The final FY25 outcome remains subject to avoiding adverse developments during FY25 ( especially given continuing conflicts in Ukraine and the Middle East, repeated ATC short-staffing and capacity restrictions, or further Boeing delivery delays).