03 February 2020, Monday 11:10:58

B737-Max delays hurt Ryanair's passenger growth target

Ryanair swung back into profit in its third quarter thanks to strong demand over Christmas and New Year.

Ryanair swung back into profit in its third quarter thanks to strong demand over Christmas and New Year.

But it warned that the Boeing 737 Max delays will mean it will not meet its 200m passengers per year target until as late as 2026, two years later than planned.

Profit for the three months to the end of December hit €88m (£74.1m). That compares to the same period the previous year, when Ryanair fell to a €66m loss .

The budget airline welcomed almost 36m passengers across the period, six per cent higher than in 2018, and it also posted a 13 per cent climb in revenue per guest.

That comprised nine per cent higher air fares but also a 21 percent jump in passenger spending, with travellers paying for priority boarding and to choose their seats.

Ryanair warned it does not expect to see its first 737 Max planes until September or October 2020 after Boeing announced fresh delays recently.

That will cause a knock on delay on passenger growth and prevent Ryanair from achieving cost savings associated with the aircraft until late 2021.

“Delivery of the Group’s first Boeing 737-Max-200 aircraft has been repeatedly delayed from Q2 2019,” Ryanair said.

“It is now likely that our first MAX aircraft will not deliver until Sept. or Oct. 2020. The requirement for MAX simulator training will also slow down the delivery of backlogged aircraft and new deliveries.”

However, Ryanair’s fuel bill climbed 14 per cent to €700m due to higher prices and higher traffic. The Boeing 737 Max crisis also contributed to higher costs as Ryanair shelled out on maintenance of older planes that are staying in the fleet to make up for the delivery delays.

Ryanair’s full-year outlook

Ryanair raised financial year 2020 profit after tax guidance to between €0.95bn to €1.05bn in January thanks to strong festive bookings.

Ryanair now expects full year passenger traffic to grow eight per cent to 154m travellers, with revenue per passenger to rise between three and four per cent.

But the airline’s fuel bill will rise €440m, leaving Ryanair predicting it will land “close to the mid-point” of its guidance.

“This guidance is heavily dependent on close-in Q4 fares and the absence of any security events,” the company said.
Broker Liberum hailed Ryanair’s Christmas numbers as it stuck to a buy rating on the airline’s stock.

“The performance was even stronger than we had forecast, with average fares up nine per cent and ancillary revenue per passenger up 21 per cent,” it said in a note.

“Unsurprisingly, FY guidance was unchanged from the upgrade three weeks ago, although this implies a bigger fourth quarter loss year on year, which seems potentially pessimistic.”

B737-Max delays hurt Ryanair's passenger growth target

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