Ryanair targets billion-euro profit as demand defies higher oil prices

Ryanair CEO Michael O'Leary said: 'We’d be disappointed if we don’t do somewhere north of a billion in profits in the next 12 months.'

Ryanair is targeting at least €1bn in profit for the coming year as pent-up demand buoys summer sales and a strong hedging position helps protect against the higher price of jet fuel.

Europe’s biggest discount airline expects to return to profitability and reach a goal of carrying 165m passengers in the 12 months from April 1, provided there’s no major coronavirus flare-up and disruption from the war in Ukraine is contained, chief executive officer Michael O’Leary said.

“We’d be disappointed if we don’t do somewhere north of a billion in profits in the next 12 months,” O’Leary said in an interview on the fringes of an Airlines for Europe trade group meeting.

“A lot of that is driven by advantageous fuel hedging. But it all depends on how strong the recovery is this summer.” 

Ryanair is 80% hedged at €56.7 a barrel on its jet-fuel requirements through next March, helping it to keep down prices even as competitors are forced to raise fares in response to the spiraling cost of crude. 

The Dublin-based carrier will deploy 65 more planes this summer after taking deliveries from Boeing taking the total to 515, and plans to open up 250 new routes.

As you move into May, June, July, August, school holidays across Europe, we’re seeing very strong demand patterns, both in volumes and pricing.

Families are especially eager to travel following the pandemic, despite tighter household budgets, the CEO told Bloomberg Television earlier.

Ryanair’s projected performance would take it back to levels of profitability achieved before the coronavirus crisis upended global travel; the airline posted a profit after tax of €885m in fiscal 2020.

Still, O’Leary cautioned that the pace of the recovery from two years of lockdowns and travel curbs is vulnerable to further developments beyond the travel industry’s control.

Losses for the year fiscal year just ending will be somewhere between €250m and €450m, he said.

A sustained rise in oil prices could start to blunt demand toward the end of the calendar year, though any concern over consumer spending would generally favour low-cost carriers like Ryanair, he said.

“If oil prices remain high, where we think things will get a bit scary will be next winter,” the CEO said. 

“You’ll have rising energy demand, European economies will be somewhat undermined by higher oil prices or concerns over energy supply, and we may be looking at the risk of a recession.”

• Bloomberg