By Conor Humphries and Padraic Halpin
DUBLIN (Reuters) – Ryanair expects a very strong profit recovery next year as it takes advantage of lower costs and a post-COVID retrenchment that may leave 25% less short-haul capacity in Europe, Group Chief Executive Michael O’Leary said on Wednesday.
The Irish airline, Europe’s biggest low-cost airline, expects to more or less break even in its financial year to the end of March 2022, with a small profit or a small loss possible, O’Leary said.
But the year to the end of March 2023 “will be a very strong profit recovery because we have much lower costs emerging out of the COVID crisis,” he told the Financial Times in an interview that was broadcast online.
“When Europe returns post-COVID by 2022 or by 2023, we’re looking at about 20-25% less capacity in the market based here in Europe,” he said, describing the changes as “seismic.”
The question for the coming months is whether the European Union will reach its target of vaccinating 80% of adults by the end of June or the end of August.
Ryanair currently thinks it will be closer to June.
“Europe is going to be a sea of vaccines through April, May and June,” he said. “There’s huge pent up demand. People are gagging to go away, get some sunshine.”
The Ryanair boss cited weekly bookings that have almost doubled to 700,000 in the last three to four weeks amid an “inevitable” sustained period of low prices into May as passengers book trips at much shorter notice than ever before.
Before the COVID-19 pandemic struck, Ryanair would typically be taking 2 million bookings a week at this time of the year, he said.
O’Leary said he expects “reasonably robust” traffic in the three months to the end of September before it returns to flying 80-90% of normal capacity over the winter.
O’Leary said Ryanair would expect to post a modest loss in the coming year if it carried somewhere between 80 and 100 million passengers and eek out a small profit if it flies over 100 million passengers.
In terms of load factor – a measure of how well an airline is filling available seats – O’Leary said the best Ryanair can hope for this year is to reach a mark of 80%.
(Writing by Padraic Halpin and Conor Humphries; Editing by Alistair Bell)
