2023-05-22 06:10:11 ET
Ryanair ( NASDAQ: RYAAY ) shares flew higher prior to the bell in premarket action on Monday after reporting a return to profits in its full-year review.
The company said that it operated 116% of its pre-pandemic capacity in 2023, growing market share across numerous European markets. Total revenue marked a triple-digit percentage jump year over year to €10.78B. The Irish airline notched €1.43B in net income, translating to €1.16 in earnings per share for the year in contrast to a €0.21 per share loss in fiscal 2022.
CEO Michael O’Leary added that demand remains robust, aided by a return of Asian and American travelers to European markets.
The company expects traffic to expand about 10% in fiscal 2024, rising to 185M “although Boeing’s recent delivery delays may push some of this growth into the lower yielding H2 and may reduce this target slightly,” the earnings release stated. Higher oil prices are expected to increase jet fuel costs year over year by €1B, though more fuel-efficient aircraft are expected to offset some of the cost.
“Despite ongoing uncertainty over the timing of Boeing deliveries, almost 15% unhedged fuel, limited Q2 visibility and zero H2 fare visibility (normal at this time of year), we are cautiously optimistic that FY24 revenue will grow sufficiently to cover our €1B higher fuel bill and still deliver a modest year-on-year profit increase,” the earnings release stated. “ This guidance remains heavily dependent upon avoiding adverse events during FY24 (such as the war in Ukraine or further, repeated, Boeing ( BA ) delivery delays).”
Third Bridge analyst Olly Anibaba told Seeking Alpha that the outlook into the peak summer travel season looks achievable.
"Demand for European summer leisure travel looks robust and is expected to be inelastic during peak summer travel,” he said. “Despite inflation weighing on consumer spending, European consumers are still opting for leisure travel over other forms of entertainment.”
Though, he noted that the trajectory for the fall and into the winter remains in question. Anibaba suspects the company may be forced to offer discounts as demand wanes into the close of 2023. He added that "Boeing delivery delays and issues with French air traffic control" could hamper the carrier's flight path through the calendar year.
Dublin-listed shares of Ryanair ( RYAAY ) rose 2% on Monday.
More on Ryanair:
Boeing's stock rises after Ryanair orders up to 300 of its 737 Max jets
European airline stocks: Deutsche Bank prefers Ryanair over Wizz Air
Ryanair traffic rose 13% Y/Y in April
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Ryanair stock rises on return to profitability