Ryanair Achieves Record Annual Profit Amid Surging Passenger Numbers

7 months ago Editor

Dublin, May 27, 2024 — Ryanair, the budget airline, has reported its highest annual profit to date, driven by significant growth in passenger numbers and revenue despite rising operating costs. The company also highlighted a challenging pricing environment for the current quarter.

Financial Highlights

Profit After Tax: Increased by 34% to €1.92 billion ($2.09 billion) for the year ending March 2024.
Revenue: Grew by 25% year-on-year to €13.44 billion.
Passenger Numbers: Reached 184 million, a 23% increase compared to pre-Covid levels.

Higher traffic and fare increases helped Ryanair counteract a 24% rise in operating costs, including a 32% spike in the jet fuel bill.

Share Buyback and Financial Strategy

Ryanair announced a €700 million share buyback program, reflecting a robust balance sheet. Chief Financial Officer Neil Sorahan emphasized the company’s focus on restoring employee pay post-Covid, implementing pay raises, and reducing debt.

“We’ve been paying down bonds and now have €1.4 billion in gross cash. This strong financial position allows us to confidently return €700 million to shareholders on top of our regular dividend program,” Sorahan told CNBC’s “Squawk Box Europe.”

Market Reaction and Pricing Concerns

Despite the positive financial results, Ryanair’s shares dipped 0.46% in midmorning trading. Deutsche Bank analysts pointed out that recent pricing trends have been weaker than anticipated.

“Although the buyback is positive and shows confidence, the further softening of pricing for peak summer might overshadow this news,” the analysts noted.

CEO Commentary

In an investor presentation, CEO Michael O’Leary attributed the softer pricing to a “recessionary feel” in Europe and weaker consumer sentiment.

“If we need to discount or reduce fares to maintain a 94% load factor in April, May, and June, we will do so,” O’Leary said. The load factor for the full year 2024 was 94%.

Operational Adjustments and Challenges

Ryanair’s pricing strategy was also impacted by the abrupt removal of its flights from several online travel agents (OTAs) in December. Sorahan mentioned that this move, although surprising, was ultimately beneficial as it led to new agreements with major OTAs and increased direct customer interactions.

The airline faces additional challenges, such as delays in the delivery of new Boeing aircraft and the grounding of several Airbus planes due to engine issues. “Capacity will be constrained for the foreseeable future,” Sorahan noted.

Despite these hurdles, Ryanair’s strategic financial management and operational adjustments position it well for continued success in a competitive market.