DUBLIN, IRELAND — Irish low-cost carrier Ryanair, famed for ferrying passengers across Europe with cut-throat fares equivalent to bus tickets over the past thirty years, warns customers that the era of ultra-low fares might be drawing to a close.
As travelers flood back post-pandemic, Ryanair's Chief Financial Officer, Neil Sorahan, reports that customers appear more willing to pay higher fares, suggesting ticket prices could double from their former average of €9.99.
Speaking after announcing near record-high profits, Sorahan shared in an interview with Bloomberg Television that industry-wide ticket prices are creeping upwards, fueled by strong demand for summer vacations and a scarcity of aircraft as airlines compete for new models. This trend has seen Ryanair's rival, EasyJet Plc, elevate its earnings forecast, with other carriers like Deutsche Lufthansa AG and Air France-KLM observing an influx of leisure customers into their business-class sections.
On Monday, Ryanair posted an after-tax profit of €1.43 billion ($1.5 billion) for the fiscal year ending March 31, contrasting sharply with a loss of €355 million the previous year. Looking ahead, the Dublin-based carrier anticipates a €1 billion increase in its fuel bill for the current fiscal year, though it expects higher revenue to balance this increase. The company recently ordered as many as 300 Boeing 737 Max jets, setting its sights on capturing 30% of Europe's air-travel market by 2034.
Bernstein analyst Alex Irving highlighted Ryanair's confidence in its financial outlook, pointing to a net cash balance sheet likely to cover capital expenditure on an ongoing basis. The company's cash position reached €4.7 billion at the end of the fiscal year, and plans to maintain a broadly flat net cash-to-debt ratio.
Despite Ryanair's cautious statement regarding possible passenger number reductions due to Boeing Co. delivery delays, Sorahan remains optimistic about reaching the goal of transporting 185 million passengers this year. Passenger numbers in the previous fiscal year reached 168.6 million, representing a 74% increase.
Ryanair's summer ticket prices are showing an upward trend compared to last year, with fares around 10% higher than pre-Covid levels. Sorahan highlighted strong ancillary revenue from services such as priority boarding and in-flight meals, which have risen from pre-Covid levels of €19 to €23 per passenger.
The airline, which is Boeing's largest customer in Europe, has faced criticism for delays in aircraft deliveries due to manufacturing issues with the 737 model. Despite these challenges, Ryanair sees growth opportunities in domestic flying within countries like Italy and Greece, and is targeting expansion in Germany, Morocco, and Scandinavia in the longer term.
