Shares in budget airline Ryanair (RYA) gained 1.5% to €17.10 as it struck an optimistic tone on its outlook after the pandemic, despite having swung to a big annual loss as a result of lockdowns and travel bans.
Touting its cost-cutting measures and the strength of its balance sheet, looking past the Covid-19 crisis Ryanair said there are ‘many growth and market share opportunities that are now available across Europe, especially where competitor airlines have substantially cut capacity or failed.’
For its current financial year to March 2022, Ryanair declined to give guidance and said that with a very close-in booking curve, visibility for the remainder of its year is ‘close to zero’.
But it added that bookings have jumped significantly since the start of April, albeit from a very low base, and said it sees traffic towards the lower end of its previously guided range of 80 million to 120 million passengers. The firm cautiously expects to reach breakeven assuming a successful rollout of vaccines in Europe this summer in time for the peak travel period of July, August and September.
FROM €1 BILLION PROFIT TO €815 MILLION LOSS
The outlook came as the airline swung to a €815 million net loss in its financial year to 31 March 2021, compared to a €1 billion profit after tax the previous year.
Revenue plunged 81% to €8.49 billion as passenger volumes also fell 81% to 148.6 million. The firm’s passenger load factor, i.e. how full its planes are, dropped 71% compared to 95% in the year to 31 March 2020. For reference, a load factor of around 80% is the level which budget airlines typically need to breakeven.
The airline managed to slash operating costs by 66% to €7.37 billion and continued to tout the strength of its balance sheet, which it again described as one of the best in the industry with €3.15 billion in cash as at 31 March.
EXPERT VIEW
AJ Bell investment director Russ Mould said airlines are at a ‘major turning point’ today as restrictions ease slightly, with Ryanair ‘keeping its fingers crossed’ that the rollout of Covid vaccines will help to reopen the sky for European air travel and tourism this summer.
Despite swinging to a big loss in 2020, Mould said Ryanair has ‘kept its eye on the longer-term prize’ and pointed to it recently increasing an order for B737-8200 Gamechanger aircraft in a bid to have an advantage over rivals, with the planes having more seats as well as lower fuel burn and noise emissions.
He added, ‘Ryanair has a reputation for being able to constantly find new ways to make money and separate it from the crowd, and the shape of its future fleet would suggest another potential victory.’
The new aircraft will have 4% more seats, 16% lower fuel burn and 40% lower noise emissions, and Ryanair said they will enable it to grow to 200 million passengers a year over the next five years.
It hopes to take delivery of its first Gamechanger aircraft in late May and hopes to have over 60 Gamechangers in the fleet before the peak summer period in 2022.
