Ryanair posted record profits in the third quarter as the budget airline benefited from pent-up travel demand from cost-conscious customers.
The budget airline raised its full-year profit guidance following a strong performance as profit after tax jumped to €211m (£185m) between October and December. This compares with a loss of €96 million in the same period in 2021 and more than double the profit of €88 million in the same three months of 2019, before the pandemic.
Ryanair said there was “strong pent-up demand for travel” over the October half-term holiday and the Christmas and New Year period.
There was “strong demand” for Easter and summer flights, driven by a return of Asian and American tourists encouraged to visit Europe by the strength of the US dollar, chief executive Michael O’Leary said.
The carrier hailed the performance, which was the first in recent years not affected by Covid restrictions or geopolitical events, including Russia’s invasion of Ukraine.
This is despite a cost-of-living crisis that has strained household finances and forced many consumers to cut back on non-essential spending. But Ryanair’s chief financial officer, Neil Sorahan, said customers were turning to low-cost airlines like Ryanair for an escape.
“I think people want to get away from all this bad news,” he told BBC Radio 4’s Today programme. “They want to get some sunshine on their backs and book their numbers. And frankly, we have the lowest costs of any airline in Europe.”
Sorahan said the airline was able to keep its prices low thanks to the fact that it hedged fuel costs. About 80% of the expected fuel consumption for 2023 has been hedged so far, Ryanair said.
However, the airline is bracing for a loss in the fourth quarter, covering the three months from January to March, partly due to the timing of the Easter holidays, which will again fall in April this year. This is despite strong bookings in recent weeks as customers looking to get away lock in current prices for summer holidays.
Ryanair reiterated its full-year profit guidance of between €1.3bn and €1.4bn. Over the weekend, Ryanair began to capitalize on the collapse of UK regional airline Flybe, which left passengers stranded and hundreds of crew out of work. Ryanair is running a recruitment drive and is planning a recruitment drive for ex-Flybe staff at Birmingham Airport on February 2.
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Sorahan said he expects further consolidation in European airlines in the coming years as rival carriers come under pressure. “If you don’t have a strong balance sheet and you don’t have a low cost base like we have, it’s very difficult in this post-Covid environment to survive strongly,” he said.
“I mean, we’re almost unique in reporting profitability at this point. We are unique in the balance sheet that we have and I think you will see more consolidation across Europe and probably in the UK over the next few years.”
The airline said it is hiring Ukrainian pilots and cabin crew to be ready to return to the country when the war ends.
“We are very committed to returning to Ukraine as soon as it is safe to do so,” O’Leary said.
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