Ryanair has summer profit in sight as Europe travel revives


RYANAIR said it expects to post a profit this quarter as the easing of coronavirus curbs spurs a surge in travel to European beaches.

The summer high season should help carry Europe's biggest discount carrier to breakeven or a small loss for the year ending in March, assuming vaccine rollouts contain the pandemic, Ryanair said. The Irish firm posted a smaller-than-expected first-quarter loss of 273 million euros (S$437.5 million), according to a statement on Monday.

Ryanair has been adding seats faster than most competitors and keeping fares low to fill planes as travel starts to recover in Europe. The Dublin-based company said passenger numbers should exceed 90 million in fiscal 2022, aiding its bid to win market share, after previously predicting they would be closer to 80 million. Pre-pandemic, Ryanair ferried about 150 million people.

Receipts from add-ons such as priority boarding and seat reservations will help support margins until demand recovers fully, chief financial officer Neil Sorahan told Bloomberg Television.

"We would hope in Q2 that we make a profit," he said. "A lot will depend on how that final outcome is, but we have a lot of hopes as we get into the autumn as well. Germany and central and Eastern Europe have been very strong."

Ryanair shares advanced 2.3 per cent as at 8.07 am Dublin time. The stock is little changed this year.

The loss for the three months till June was slightly narrower than the 277 million euro average estimate of analysts. Ryanair lost 185 million euros in the year-ago period as hoped-for Easter traffic failed to materialise.

Sanford C Bernstein analyst Daniel Roeska said the passenger outlook bolsters evidence that "the recovery is real and happening right now" while calling the fiscal 2022 outlook "cautious". Though summer earnings will be vital, limiting winter losses will also be key, he said.

Ryanair said the chief focus now is on filling planes, and that it will cut fares to help occupancy attain pre-Covid levels. The first-quarter load factor was 73 per cent, and Mr Sorahan said the objective is to reach 90 per cent or so over the fiscal year, with pricing strengthening towards the end of the period and into next summer.

The carrier said this month it would hire 2,000 pilots over the next three years to fly 210 new Boeing 737 Max jets that it began taking in June.

Britain, Ryanair's biggest market, remains a question mark. Frequent changes to travel restrictions combined with costly testing requirements have led people there to travel less this summer, though even there things are "picking up again", Mr Sorahan said. BLOOMBERG

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