Ryanair has warned of a “fragile” recovery in airline passenger numbers after Russia’s invasion of Ukraine and the Omicron coronavirus variant pushed it to a €355m loss for the financial year.
The Irish airline would aim for a “return to reasonable profitability” over the financial year to March 2023, it said on Monday, after it lost €1.4bn (£1.2bn) during the first two pandemic-affected financial years.
Airlines have been hanging on for the return of passengers following two years of travel restrictions. There were high hopes for significant earnings in the 2022 summer holiday season after many countries lifted bans on tourism, but the knock-on effects of Russia’s invasion of Ukraine plus staffing difficulties have clouded airlines’ prospects.
Michael O’Leary, the Ryanair chief executive, said “we hope to return to reasonable profitability” in the coming year and highlighted “pent-up demand” despite uncertainty. The “recovery is strong but fragile”, he said. “With luck we’ll have a strong summer.”
Russia’s invasion of Ukraine and the rapid spread of the Omicron variant “immediately damaged close-in bookings and yields for the Christmas and Easter peak travel periods”, O’Leary said.
Ryanair’s revenues tripled to €4.8bn in the year to 31 March 2022 compared with the first year of coronavirus lockdowns.
The airline is planning to fly 165 million passengers in the current financial year, up from 97 million in the year to March, and above its peak of 149 million passengers in the years before Covid-19.
Yet the company said that ticket pricing in the current financial quarter “continues to need stimulation” with lower prices to attract more customers. Airlines’ ability to attract customers at higher prices is likely to be affected in the coming months by the cost of living crisis, with families left with less money to spend after covering rising fuel and food prices.
O’Leary nevertheless said the company was better placed than rivals and would expand its market share, opening 15 new bases and more than 700 new routes in the summer. Fares were higher than in 2019 for peak season flights, he said. “There’s a lot of capacity cutbacks and hopefully we’re going to be the beneficiaries of that.”
Ryanair is not suffering from the recruitment problems experienced by rivals as they wait for security approvals, he said, despite being affected indirectly by “pinch points” in airports: “In Dublin, Berlin, there are big security queues, where they are struggling to get low-wage, frontline staff back into work.”
O’Leary said: “We went out of our way during Covid to keep everybody employed, we kept all the pilots and cabin crew current … We didn’t fire people and aren’t trying to hire in the recovery where background checks are taking time.”
“From our perspective – pilots, cabin crew, engineers we are in good shape, there’s a lot of flexibility hiring anyone on the continent, but the UK is troublesome post-Brexit.”
Ryanair struck an agreement with unions to cut pay for much of the pandemic, to preserve jobs, and O’Leary said they were “entering a period of pay restoration” over three years, although he warned: “Covid’s not quite over yet. Passenger volumes are back but pricing isn’t yet.”
Pilots’ union Balpa said they had “made huge sacrifices to help the company through the Covid crisis”, and said that with a return to profit, they “now need to see management acknowledge their loyalty”.
O’Leary said he was concerned that rivals had “talked up” the prospects for a strong summer, and that there was a need for caution going into the winter because of the possibility of a new coronavirus variant or a worsening global economy amid global inflationary pressures.
