Ryanair made record third-quarter profits as the budget airline benefited from pent-up travel demand from cost-conscious customers.
The budget airline increased its full-year profit guidance after the strong performance, as profit after tax surged to €211m (£185m) between October and December. That is compared with a loss of €96m during the same period in 2021 and more than double its €88m profit in the same three months in 2019, before the pandemic.
Ryanair said there was “strong pent-up travel demand” during the October half-term break and the Christmas and new year period.
There was “robust demand” for Easter and summer flights driven by the return of Asian and American tourists being encouraged to visit Europe because of the strength of the US dollar, the chief executive, Michael O’Leary, said.
The carrier cheered the performance, which was the first in recent years not to be affected by Covid restrictions or geopolitical events, including Russia’s invasion of Ukraine.
That is despite the cost of living crisis, which has put a strain on household finances and forced many consumers to pull 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’re keen to get some sun on their back and they’re booking in their numbers. And in fairness, we’ve got the lowest cost of any airline in Europe.”
Sorahan said the airline was able to maintain its low prices thanks to the fact it had hedged the cost of fuel. About 80% of its expected fuel use for 2023 has been hedged to date, Ryanair said.
However, the airline is preparing for a loss in the fourth quarter, covering the three months from January to March, partly due to the timing of Easter holidays, which again will fall in April this year. That is despite strong bookings in recent weeks, as customers keen to get away are locking in current prices for the summer holidays.
Ryanair reiterated its full-year profit guidance of between €1.3bn and €1.4bn. Over the weekend, Ryanair started capitalising on the collapse of the regional UK airline Flybe, which left passengers stranded and hundreds of crew without jobs. Ryanair has set up fast-track hiring and planned a recruitment drive for former Flybe staff at Birmingham airport for 2 February.
Sorahan said he expected further consolidation across European airlines over the coming years, as rival carriers come under strain. “If you don’t have a strong balance sheet and you don’t have a low cost base, such as we have, it’s very difficult in this post-Covid environment to be a strong survivor,” he said.
“I mean, we’re almost unique in reporting profitability at this point in time. We’re unique in the balance sheet that we have and I think you’re going to see more consolidation across Europe, and possibly in the UK, over the next number of years.”
The airline said it was hiring Ukrainian pilots and cabin crew so that it would 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.
