LONDON – The world’s most controversial Ultra-Low-Cost Carrier, Ryanair, revealed its full-year performance results, stemming from March 2017 to March 2018.
The carrier reported an overall 10% increase in their full-year profit to €1.45 billion.
Ryanair’s fares reduction showed a 3% decrease, which stimulated growth to 130 million passengers.
During the same period, last year, the carrier had carried 120 million passengers annually.
This year, Ryanair’s average load factor was of a strong 95%.
The table of results is as follows:
|Year End 31 Mar Results (IFRS)||Mar 31, 2017||Mar 31, 2018||% Change|
|Profit after Tax (m)||€1,316||€1,450||+10%|
Ryanair’s CEO, Michael O’Leary, admitted that some of the year’s highlights were the traffic statistics growing despite the grounding of 25 planes during the slower winter season.
The average Ryanair fare also dropped 3% to around €39.40 per seat. Unit costs were cut by 1%, although this is excluding fuel due to the cost of jet fuel rising by 3%.
New Planes, New Bases, New Routes
The Irish low-cost carrier also took delivery of 50 brand-new planes, increasing the fleet size to 430 Boeing 737s.
The addition of these planes created 1,500 new jobs and established over 600 new promotions for staff.
The new planes also allowed Ryanair to open four bases in Burgas, Memmingen, Naples, and Poznan.
The airline also launched over 260 new routes to destinations in Jordan, Turkey, and Ukraine.
Ryanair’s growth seems to be unstoppable, as the carrier is still due to receive 135 firm Boeing 737 MAX 200 ‘Gamechanger’ aircraft, with an option for a further 75.
With this batch of brand-new planes, the total delivery count rises to 210 if they so wish to exercise the additional options.
Moreover, Ryanair Sun, the carrier’s new charter airline based in Poland, also operated its first flights at the end of the financial year.
Pilot Dispute No More, Operational Performance
The airline’s crippling pilot dispute was also solved, with a new 5-year pay deal for both pilots and cabin crew.
The September 2017 pilot rostering failure came to the resolution of €800 million being returned to shareholders via buybacks.
O’Leary said to be pleased, even though 2017 was a “year of overcapacity in Europe, leading to a weaker fare environment, rising fuel prices, and the recovery from our rostering management failure.”
Regarding operational performance, Ryanair’s on-time scores dipped from 88% to 86%.
The airline rapidly blamed the ATC strikes that to this day are still happening throughout France.
“The delivery of ATC services in Europe is lamentable and creating unacceptable delays for our customers,” said Ryanair in a statement.
The carrier said that its punctuality has been negatively impacted due to the adverse weather in the winter, which caused snow closures at bases like Dublin and Stansted back in February/March time.
Costs on the rise
Ryanair believes that its costs will substantially increase over the next 12-24 months.
The carrier expects its staff costs to rise by almost €200 million, half of which is higher pay for staff on the front line as well as an increase in employees to the company.
Fuel will also be a “major cost headwind,” expecting to rise to $80 per barrel compared to last year’s average $58 per barrel.
The airline believes that the political circumstances in Venezuela, Libya and Iran will elevate the price of oil.
However, Ryanair also assumes that the rise in fuel prices can be mitigated with the arrival of the much more fuel efficient 737 MAXs over the coming years.
Europe is their Oyster
The airline’s European consolidation is a reality. Ryanair is looking to increase their stake in Niki Lauda’s Laudamotion from 24.5% to 75%, subject to EU approval.
This, on top of the launch of Ryanair Sun, is part of the airline’s overall strategy to thrive further in Southern and Eastern Europe.
Ryanair went for Laudamotion due to their valuable portfolio of slots that they have in Germany, Austria, and Spain.
Profit is expected to be made from Laudamotion over the next two years and will require around €100 million of startup capital.
O’Leary added in an interview with Bloomberg that having Airbus planes in the Ryanair Group through Laudamotion gives them the chance to advance a relationship with Airbus and potentially order aircraft from the Toulouse-based manufacturer.
He did concede, however, that Airbus would need to solve issues with the engines on their A320neo aircraft and also approach the carrier with no worries about Boeing undercutting the competition.
The Brexit Timebomb, Challenges Ahead
The carrier also dedicated a section to Brexit. The UK is due to leave the European Union in March 2019.
Ryanair is currently in the process of planning for a hard Brexit during the 18 month transition period between March 2019 and December 2020.
The carrier states that it is likely that flights into the UK could be treated as non-EU and possibly affect the licensing and flight rights that the carrier currently has in the UK.
The carrier has also applied for a UK Air Operator’s Certificate (AOC) this year, and they hope to get it before the transition period begins.
Ryanair expects traffic to continue growing by another nine million over the space of 12 months to 139 million passengers and continue to keep load factors at around 95%.
Also, the airline disclosed its ancillary product sales showing that 50% of its passengers are now paying for seat allocation, and 20% for priority boarding.
Wowza! @Ryanair discloses ancillary product sales info in its FY2018 report. 50% of pax pay for allocated seats, 20% for priority boarding. Hope this starts a trend – investors will benefit. https://t.co/eI7poVZGOV #airline pic.twitter.com/lxCEplYXe9
— Henry Harteveldt (@hharteveldt) May 22, 2018
The carrier believes unit costs are going to rise upwards of 9% due to higher staff and oil costs, adding up to €400 million.
Ryanair will still continue to invest in its 6-year growth plan which will accommodate up to 600 aircraft in its fleet, carrying 200 million passengers per year.
The airline issued a profit drop also for the next year which will fall into a range of €1.25 billion and €1.35 billion due to ATC disruption, security events, as well as Brexit.
Overall, it does seem as if the carrier is still growing strong and will continue to do so over the next few years.