Air transport - Ryanair budget airline plans for lower ticket prices
Europe's largest budget airline Ryanair reported significantly lower earnings at the beginning of its financial year due to lower flight prices. The company is cautious for the second quarter of its business, stating that pricing is challenging and ticket prices are likely to be significantly lower than a year ago, according to the Irish company in Dublin. Previously, the airline had expected stable to slightly rising prices.
In the past quarter, ticket prices on average fell by 15 percent. Unlike the previous year, some strong travel periods during Easter fell in March. The airline also had to offer higher price discounts to customers than planned. For the three months up to the end of June, there was a surplus of 360 million Euro. A year ago, the Easyjet competitor had still achieved a surplus of approximately 663 million Euro.
More Passengers - But Lower Aircraft Utilization
Ryanair counted around 55.5 million flight passengers in the months of April to June and thus ten percent more than a year ago. The company aims to increase the number of passengers in the current financial year, by eight percent to 198-200 million.
The utilization of the aircraft worsened from 95 to 94 percent in the three months up to the end of June, and turnover shrank slightly by one percent to 3.63 billion Euro.
The result for the first half of the year now depends on bookings and revenues in August and September. The management of Ryanair, led by CEO Michael O'Leary, did not want to give a precise earnings outlook.
The stock came under pressure in the morning before trading. The budget airline has missed even the most pessimistic estimates and is now significantly more pessimistic than before regarding ticket prices in the current quarter, wrote analyst Harry Gowers of JPMorgan Bank. Accordingly, market expectations for earnings should decrease significantly.
- Despite the challenging pricing environment in Europe, Ryanair, the prominent low-cost airline based in Dublin, continues to attract more passengers, with a 10% increase in the April to June period, totalling 55.5 million flight passengers.
- The business year for Ryanair has started on a lower note, with the earnings being significantly impacted due to the decrease in ticket prices, which averaged a 15% drop in the past quarter.
- The impact of lower ticket prices has extended to Ireland's Air traffic, with Ryanair's major competitor, Easyjet, also experiencing a decrease in earnings from approximately 663 million Euro to a surplus of 360 million Euro in the same period.
- As part of its strategy, Ryanair aims to further increase the number of passengers in the current financial year, targeting an 8% increase from its previous level of 198-200 million.
- The performance of low-cost airlines such as Ryanair and its peer Easyjet is closely monitored by financial analysts, with JPMorgan Bank's Harry Gowers commenting that Ryanair's miss of even the most pessimistic estimates has led to a significant decrease in market expectations for earnings in the current quarter.
