Ryanair’s Q1 results were in line with the market’s expectations as a result of better-than-expected traffic and remaining low fares. Early bookings showed an encouraging uptrend and the group now projects higher FY capacity, but the pricing would remain at low levels. The FY net result is hopefully to attain breakeven.
Companies: Ryanair Holdings Plc
Ryanair’s FY21 results were in line with consensus as well as its guidance, and its liquidity remained comfortable. Its forecasts did not give much new information. All depends on a potential summer rebound, which will hopefully be unlocked by the speeding up of the vaccination roll-outs in Europe.
Ryanair’s Q3 performance was largely affected by travel restrictions in Europe and its near-term future is full of uncertainties much like its rivals. Although the group indicates no further debt or financing needs in the coming year, its narrowed (but still correct) cash position after taking into account the scheduled outflows might be hard to enthuse the market. Its balance sheet remains solid though.
Ryanair issued more pessimistic FY capacity expectations, warning the possibility of a further downgrade in the case of a second wave of COVID-19 outbreaks. This, along with the recent reintroduction of quarantine rules/travel warnings in several European countries/areas, led its share price to fall by more than 5% today.
After reporting FY20 results that beat the market, the group warns about the challenging market conditions for FY21. Nevertheless, seeing its leading management of costs and more-than-sufficient liquidity reserves, along with the progressive relaxation of travel restrictions in Europe, we are convinced by Ryanair’s promising outlook.
Strong year-end holiday traffic and buoyant revenue environment contributed to Ryanair’s satisfying quarterly earnings. The reassuring outlook is supported by the robust profitability and less negative macro conditions, which may hopefully offset the 737Max’s grounding impacts.
A summary of some recent updates regarding Ryanair’s B737 concerns: it seems that the current situation does not admit to optimism.
Ryanair reported better-than-expected figures for H1 20 and narrowed its FY profits outlook due to macro-led uncertainties and 737 Max delivery delays. The company reiterated its confidence in the 737 Max due to its improvement in efficiency.
The lower average air fares resulting from tougher industry competition and higher costs have continued to deteriorate the generation of profits, as expected.
The strong momentum in ancillary revenue growth has partially mitigated the impact of lower fares, which has helped the group to reiterate its FY20 PAT target of €750-950m (vs. consensus of €840m).
Like its European competitors, the lower airfares resulting from overcapacity and higher fuel costs have heavily weighed on Ryanair’s profitability. The FY19 profit has slid to the lowest level in four years.
Based on the unfavourable trading environment, management sees profit in the fiscal year 2020 to be in a range of €750-950m with “zero H2 visibility”, which is rather underwhelming.
Following two consecutive profit warnings, the company reported a net loss of €20m, broadly in line with market expectations. The significant reduction in fares has weighed heavily on the company’s profit despite the strong traffic growth and solid ancillary revenue generation.
The change in the company’s structure should favour M&A opportunities and cost efficiencies, which should be appreciated by investors.
Increasing uncertainty about Brexit remains a concern.
Ryanair’s H1 19 profit has dropped (for the first time in five years) by 7% yoy to €1.2bn, excluding Laudamotion’s losses. Revenue has increased by +8% yoy to €4.79bn, pushed by strong ancillary revenue growth (+27% to €1.3bn). Ex-fuel units costs were up by +7% yoy, including the 20% pay increase for pilots, pilots/cabin crew training costs and €261m arising from ATC strikes/disruptions. The lower fares (-3% yoy) have also pushed down the profit after tax. The number of passengers grew by +6% w
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