Ryanair Narrows Losses, Warns COVID Disruption May Not Be Over

Credit: Ryanair

The surge in omicron coronavirus variant cases damaged Ryanair Holdings’ yields in December and January, but the Ireland-based airline group managed to reduce its fiscal 2022 third-quarter (Q3) net loss to €96 million ($107 million) from €321 million a year earlier.  

The company warned that the aviation industry had probably not seen the last of COVID-19 disruption but sounded an upbeat note about the coming peak summer season. The airline group—which consists of ULCC, Ryanair, Ryanair UK, Buzz, Lauda and Malta Air—says it hopes to operate about 114% of 2019 summer capacity in 2022, with over 65 new aircraft in its fleet for that peak period. Ryanair had taken delivery of 41 new Boeing 737-8200s by the Dec. 31, 2021 end of fiscal Q3.  

Longer-term, the airline expects to accelerate its traffic growth, noting that it would aim—from pre-pandemic annual traffic of 149 million—to grow by 50% to over 225 million passengers per annum by fiscal 2026. 

The ULCC, whose financial year runs to end-March, said its fiscal Q3 traffic rebounded strongly (286%) to 31.1 million from 8.1 million in the year-earlier period. However, close-in-bookings and yields in December 2021 and January were “badly damaged” by omicron restrictions.  

“The outlook for pricing and yields for the remainder of financial year 2022 is hugely uncertain,” the airline group said. On Dec. 22, 2021, the airline said it was cutting its January capacity by 33% because of the omicron situation. 

“While recent bookings have improved following easing of travel restrictions, the booking curve remains very late and close-in, so [fiscal fourth-quarter] traffic requires significant price stimulation at lower prices to quickly recover load factors which suffered steep declines due to the omicron collapse in bookings over the Christmas/New Year period,” Ryanair said. 

Bernstein analyst Alex Irving wrote in a research note: “Continuing the trends seen with Wizz Air and to a lesser extent easyJet last week, fares weakened during Q3. Average fares in the quarter were €25, -25% versus the same quarter of FY’20. In our view, this is the impact of omicron dragging on close-in bookings that would have otherwise been at higher fares, resulting in a negative price-mix effect on yields that will impact all airlines this quarter.” That could persist further into the fourth quarter, he warned.  

Ryanair said fiscal Q3 started off strongly, helped by less confusion about UK travel rules, but the sudden emergence of omicron in late November 2021 led to new travel restrictions in many countries, which hit close-in Christmas and New Year bookings and fares. 

The carrier is keeping its full-year traffic forecast unchanged at just under 100 million passengers and its net loss guidance for the fiscal 2022 remains within a wider than normal range of €250 million to €450 million. “This outturn is hugely sensitive to any further positive or negative COVID news flow and so we would caution all shareholders to expect further COVID disruptions before we here in Europe and the rest of the world can finally declare that the COVID-19 crisis is behind us,” Ryanair said. 

However, the airline group sounded an optimistic note about outlook in its Jan. 31 results statement, saying: “We hope that the rollout of booster vaccines across Europe in recent weeks, and growing evidence that omicron is less virulent than other variants, will enable EU governments to remove travel restrictions and restore consumer confidence in inter-EU travel well in advance of Easter and peak summer 2022.” 

But Irving warned of the ongoing impact on fares. “Bookings are rebounding following easing of travel restrictions,” the Bernstein analyst wrote. “However, the booking curve remains late and close-in, and Ryanair is stimulating traffic to get those bookings—i.e., fares are remaining weak.”

Helen Massy-Beresford

Based in Paris, Helen Massy-Beresford covers European and Middle Eastern airlines, the European Commission’s air transport policy and the air cargo industry for Aviation Week & Space Technology and Aviation Daily.