Summary
- Ryanair had faced a difficult yield environment in Q1 FY2025, with its profit after tax (PAT) dropping by as much as 66%.
- During the period, it carried 55.5 million passengers, a 10% increase over Q1 FY2024.
- Ryanair downgraded its full-year passenger guidance but said that it was too early to provide a meaningful guidance for the full-year’s financial results.
Ryanair reported lower profits during its first quarterly earnings report of FY2025, with the quarter ending on June 30, 2024. The low-cost carrier admitted that it had to stimulate more fares than it had expected during the period, resulting in lower average fares.
Dropping profits
During the quarter, the low-cost carrier group, consisting of Buzz, Lauda, Malta Air, and Ryanair, carried 55.5 million passengers, or 10% more year-on-year (YoY), with an average load factor of 94%, compared to 95% in Q1 FY2024.
However, while its operating costs went up by 11% YoY from €2.9 billion ($3.1 billion) to €3.2 billion ($3.4 billion), its average fare dropped by 15%.
Photo: Ceri Breeze | Shutterstock
During the quarter, passengers, on average, paid €41.93 ($45.63) for a flight, compared to €49.07 ($53.40) during the corresponding period a year prior.
As a result, Ryanair’s profit after tax (PAT) plummeted 46% YoY, with the group ending the period with a PAT of €360 million ($391.7 million). In Q1 FY2024, the carrier’s PAT was €663 million ($721.5 million).
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No easter and a difficult fare environment
The group’s financial report explained that its scheduled revenues, which dropped by 6% YoY to €2.3 billion ($2.5 billion), were affected by Ryanair’s customers enjoying substantial savings, reflected by the 15% YoY drop in the average fare.
The low-cost carrier added that, in part, this was because Easter fell into March, meaning the group’s Q4 FY2024 period, and because it had to stimulate prices, namely offer discounts, more than it had expected to.
Photo: Nicolas Economou | Shutterstock
Still, there were positive signs for the low-cost carrier, including the fact that its ancillary revenues rose 10% YoY to €1.3 billion ($1.4 billion), resulting in overall revenues dropping by only 1% to €3.6 billion ($3.9 billion).
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Ever-improving performance by Boeing
Ryanair stated that while its operating expenses rose by 11%, which was marginally ahead of traffic growth, fuel hedge savings offset higher staff and other costs.
In part, the latter increased because of Boeing’s 737 MAX delivery delays, forcing Ryanair to look for alternative ways to ensure capacity, which meant that it also had to keep the older 737s, namely 737-800s, flying.
Photo: Tomasz Warszewski | Shutterstock
At the end of Q1 FY2025, Ryanair operated 156 737 MAX aircraft, which was 20 less than Boeing had been contracted to deliver during the period.
Neil Sorahan, the chief financial officer (CFO) of the Ryanair Group, stated that it had ten more 737 MAXs than in Q1 FY2024 and that by the end of July, the low-cost carrier should have around 160 aircraft for the peak summer period.
“We continue to work very closely, as Michael [O’Leary, the chief executive officer (CEO) of Ryanair Group – ed. note] already said, with Boeing, with weekly calls taking place to make sure that we get the aircraft on time.”
However, Sorahan noted that the group has noticed that Boeing’s quality and frequency of deliveries have improved, yet added that there were always risks that there could be further 737 MAX delivery delays.
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Single-digit growth
As a result, Ryanair expected that its full-year traffic would grow by 8% to 200 million passengers, which was lower than its previously issued guidance of 205 million annual travelers. That was still subject to Boeing’s ability to sustain its deliveries without further delays.
Looking forward, the Irish low-cost carrier expected unit costs to rise modestly in FY2025, with costs, excluding duel, being substantially offset by the group’s fuel hedge savings and rising net interest income.
However, while Q2 FY2025 demand has been strong, pricing remained softer than Ryanair had expected. Thus, the airline warned that its Q2 average fares would be materially lower, especially during the summer, when it previously expected them to be flat or rise slightly.
Photo: GetFocus | Shutterstock
Still, the final H1 result will depend on close-in bookings and yields in August and September, with Ryanair adding that it had almost zero Q3 and Q4 FY2025 visibility at this time.
The group warned that the last quarter of its fiscal year will not benefit from Easter and that it was too early to provide “meaningful” FY2025 PAT guidance.
Ryanair concluded that its FY2025 results depended on the industry avoiding adverse developments during the fiscal year, especially the continuing wars in Ukraine and the Middle East and the repeated air traffic control (ATC) short-staffing and capacity restrictions.
Any further delivery delays of its Boeing 737 MAX 8/MAX 8-200 aircraft would also impact its full-year results, Ryanair added.
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