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Ryanair returns to profit
Ryanair, the budget airline, has announced its first profit since the start of the pandemic as both fares and passenger numbers rebounded. The company reported profits of €1.43 billion (£1.24 billion) for the year ending in March, with average fares increasing by 50% to €41.
Despite this positive news, Ryanair warned that fuel costs are expected to rise in the coming year due to high oil prices. The airline’s CEO, Michael O’Leary, acknowledged that current fares are significantly higher than a year ago when demand was affected by geopolitical events, but he remains cautiously optimistic about future profitability.
Aviation expert John Strickland believes that fares could increase even further, with potential costs rising by an additional £20 or £30 for a family of four. However, he does not believe that these increases will deter travelers, as they would only amount to a few pounds. Ryanair experienced a significant rebound in passenger numbers, which increased by 74% to reach 168.6 million last year. The airline plans to operate its largest-ever flight schedule this summer, with 3,000 daily flights, and expects to receive 300 new Boeing aircraft by 2037.
In contrast to Ryanair’s positive performance, rival airline EasyJet reported pre-tax losses of £411 million for the six months ending in March. However, the company’s CEO, Johan Lundgren, expressed confidence as EasyJet flew over 33 million customers during that period, a 41% increase compared to the same period last year. EasyJet passengers are also paying more, with average ticket prices reaching £61, up 24% from the previous year. The International Air Transport Association (IATA) noted that airline ticket prices have only recently caught up with average inflation rates in the OECD, and have risen at a slower pace than jet fuel prices. This poses challenges for airlines as jet fuel accounts for a significant portion of their operating costs.
While global oil prices are declining, the practice of “fuel hedging,” where airlines purchase jet fuel at a fixed price for future delivery, remains prevalent in the aviation industry. As a result, airlines may continue to face higher fuel prices depending on when they locked in their costs. Despite these challenges, Ryanair remains cautiously optimistic about its financial outlook, anticipating a modest year-on-year increase in profits.