Low-cost airline Ryanair on Monday reported its best-ever annual profit, as passenger and revenue growth offset a sharp rise in operating costs, but pointed to a weaker pricing environment in the current quarter.
The Dublin-based company said after-tax profits in the full year to March 2024 jumped 34% to 1.92 billion euros ($2.09 billion), while revenue rose 25% year-on-year to 13.44 billion euros.
The airline served 184 million passengers, 23% more than before the Covid pandemic. High traffic numbers and increased fares helped Ryanair overcome a spike in costs: operating costs rose 24% year-on-year, and the airline's jet fuel bill rose 32%.
The airline also announced a €700 million share buyback programme, which CFO Neil Sorahan said reflects a “very strong” balance sheet.
“Our priorities were: restoring our employees' wages post-Covid, getting pay increases, and paying down debt,” Sorahan told CNBC's Squawk Box Europe.
“We have paid off the bonds, we now have 1.4 billion in total cash at the end of last year, which is why the board now has the confidence, in addition to the normal dividend programme, to return 700 million to shareholders.”
“Feeling sluggish”
Ryanair's Dublin-listed shares fell 0.46% in mid-morning trading, with analysts at Deutsche Bank noting that recent prices were lower than expected.
“While the buyback is good news and shows confidence, and while (full year) 24 is broadly in line with most parts of (full year) 25 guidance as expected, we fear further softening in pricing comments at the peak of the summer,” he said. Analysts note: “May win today.”
The repurchase level may also be below some expectations, they added.
In a presentation to investors on Monday, Ryanair CEO Michael O'Leary said the price declines could be due to a “sense of stagnation” in Europe or weak consumer sentiment, Reuters reported.
“If we have to discount or reduce prices to fill the 94% load factor in April, May and June, so be it,” he added. Load factor refers to the percentage of available seats that are full, and was 94% for Ryanair's full year to 2024.
Prices throughout the year were affected by the sudden withdrawal of Ryanair flights from several online travel agents (OTAs) in December.
The move was “surprising but not unwelcome,” Sorahan told CNBC, adding that Ryanair has now signed new agreements with several large online travel agencies. He said the positive thing was that Ryanair was now dealing directly with more customers rather than through third parties.
Other challenges facing Ryanair include ongoing delays in deliveries of its new Boeing aircraft, and the grounding of several Airbus aircraft due to engine problems.
“Capacities will be constrained for some time to come,” Sorahan said.
