Ryanair H1 losses narrow but annual loss expected
By Michele Maatouk
Date: Monday 01 Nov 2021
(Sharecast News) - Budget airline Ryanair posted a narrowing of its losses for the first half on Monday as traffic rebounded, but downgraded full-year guidance to expectations for a loss of as much as €200m.
In the six months to 30 September, the company's loss came in at €48m, down from €411m in the first half of last year, as traffic rose 128% to 39.1 million. Revenue grew 83% to €2.15bn.
In the quarter to the end of September, Ryanair swung to a profit of €225m from a loss of €225.5m in the same period a year ago. This was the company's first quarterly profit since the pandemic hit.
Ryanair said that following a very badly disrupted first quarter, which saw most Easter flights cancelled and a slower-than-expected easing of EU travel restrictions in May and June, traffic rebounded in the second quarter with the successful rollout of the EU Digital Covid Certificates in July.
"In recent weeks, we have seen a surge in bookings for the October mid-term and Christmas breaks and we expect this peak buoyancy to continue into Easter and Summer 22," it said.
However, the company also said it now expects to record a full-year loss of between €100m and €200m, versus guidance given in July for "somewhere between a small loss and breakeven".
"The outlook for pricing and yields for the winter of FY22 will be challenging. With the booking curve remaining very close-in, traffic recovery will require continuing price stimulation," the airline said. "This, coupled with rising costs for the small unhedged balance of our fuel needs, means that visibility for the remainder of FY22 is very limited. It is therefore difficult to provide meaningful FY22 guidance."
Ryanair also said on Monday that it is considering de-listing from the London Stock Exchange. It said trading on the LSE as a percentage of overall trading volume in its ordinary shares has reduced "materially" during 2021.
"The migration away from the LSE is consistent with a general trend for trading in shares of EU corporates post Brexit and is, potentially, more acute for Ryanair as a result of the long-standing prohibition on non-EU citizens purchasing Ryanair's ordinary shares being extended to UK nationals following Brexit," it said.
"The board of Ryanair is now considering the merits of retaining the Standard listing on the LSE. Ryanair has a primary listing on the regulated market of Euronext Dublin, which offers shareholders the highest standard of protection, including compliance with the UK Corporate Governance Code, and its ADRs are listed on Nasdaq."
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "Guidance for losses this financial year has rattled Ryanair shares, confirming that recovery from the pandemic will likely take longer than expected. With plenty of uncertainty about the shape of the economic recovery, the eventual bill form the pandemic could yet be even higher than feared. However, there are some signs that Ryanair will emerge from the pandemic stronger than it went in.
"New, more efficient planes have the potential to boost Ryanair's competitive edge on prices in the post pandemic world - and with carbon taxes likely to increase in the coming years that could be crucial. Meanwhile, new routes and fierce negotiations with airports could further reduce the group's cost base for years while also boosting its potential market. A balance sheet which is looking stronger every quarter is also taking pressure off the group - giving it some options even in a tougher environment.
"Overall then these results look disappointing in the short term, but perhaps provide reasons for long term optimism."
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