Ryanair and OMV, the international integrated oil, gas and chemicals company headquartered in Vienna, have today (14^th Sept) signed a Memorandum of Understanding (MoU) to supply sustainable aviation fuel (SAF) at Ryanair airports across Austria, Germany and Romania. While limited production of SAF remains a global aviation issue, this MoU gives Ryanair unique access to purchase up to 160,000 tonnes (53m gallons) of SAF from OMV over the next 8 years, saving over 400,000 tonnes in CO₂ emissions (equivalent to c.25,000 Ryanair flights from Dublin to Vienna).

This landmark deal demonstrates Ryanair’s continued commitment towards 12.5% SAF by 2030 target and the airline’s ambition to reach net-zero emissions by 2050. Ryanair has already made significant progress towards its environmental goals through its $22bn investment in its new Boeing 737 ‘Gamechanger’ fleet, which produce 16% less emissions and 40% less noise; the Sustainable Aviation Research Centre in Trinity College Dublin, and now its partnership with OMV, who is also advancing its ambitious strategic sustainability goals by adding SAF to its product range among several other measures.

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Ryanair is facing weekly strikes from its Spanish cabin crews union through January according to Reuters.

More from Reuters:

https://www.reuters.com/business/aerospace-defense/ryanairs-spanish-cabin-crew-union-calls-strikes-until-january-2022-07-27/

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Ryanair welcomed the ballot approval by its Spanish based pilots on post-Covid pay restoration, which follows the recent acceptance by its French based pilots of a similar agreement. These agreements with the SEPLA (Spain) and SNPL (France) unions deliver accelerated pay restoration and future improvements to pay in each year up to March 2027.

This year the airline will grow to 115% of its pre-Covid capacity and is prioritizing the early restoration of pay for its people through these re-negotiated agreements to keep jobs secure and to have a foundation for growth. These new accelerated deals also provide for pay enhancements and other benefits beyond full restoration of pay for Ryanair’s Spanish and French based Pilots over 5 years to March 2027.

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Ryanair has announced its upcoming Hungarian Winter 2022/23 schedule with one new route to the exciting destination of Lanzarote.

This brings Ryanair’s total Winter 2022/23 routes to/from Hungary to 53, giving customers more Winter travel options and driving further inbound tourism throughout the off-peak season.

With 90 bases and over 2,500 routes operating across 36 European countries this Winter, Ryanair continues to drive traffic recovery and create jobs across Europe sustainably with a growing fleet of new Boeing 737 “Gamechanger” aircraft, which burn 16% less fuel and 40% less noise emissions, while adding 4% more seats.

In other news, Ryanair has called on Minister of Economic Development, Márton Nagy, to explain why;

1. Airlines are being levied an excess profits ‘tax’, to ‘protect Hungarian families’, when airlines are reporting record losses due to Covid and the Ukraine invasion.
2. Why are Hungarian families and visitors being asked to pay higher fares when air travel to/from Hungary has suffered 2 years of Covid and Ukraine losses?
3. How does raising taxes on air travel ‘help’ Hungarian families.

This is not an ‘excess profits’ tax, it is just highway robbery by a Government that is completely out of touch with reality. When other EU Govt’s are cutting travel taxes/airport charges to recover traffic, tourism and jobs post Covid (and the Ukraine invasion), Hungary’s Minister Nagy is following a new and failed economic strategy of imposing ‘excess profits’ tax on loss making airlines like Ryanair and Wizz, which will further reduce the competitiveness of Hungary’s air travel and tourism industries.

Ryanair welcomes the proposed consumer protection investigation and calls on the Budapest City Council to extend this probe to investigate how the Hungarian Government is introducing an ‘excess profits’ tax on a loss-making industry such as airlines. When the loss-making airlines are trying to recover from Covid and Russia’s invasion of Ukraine, the last thing we or passengers need is an ‘excess profits’ tax. Perhaps Minister Nagy can explain why this idiotic tax is being imposed on the loss-making airline sector.

Ryanair’s CEO Michael O’Leary said:

“One can understand why the Hungarians might impose an excess profits tax on the oil and gas sectors, who are making windfall profits as a result of Russia’s illegal invasion of Ukraine. But to extend this ‘excess profits’ tax to a loss making industry like air travel, which is struggling to recover from 2 years of Covid, and the more recent impacts of Russia’s invasion of Ukraine, shows that Minister Nagy has forgotten his economics. We will be sending him a new booklet ‘Economics for Dummies’, which we hope he will study so he can now explain why an ‘excess profits’ tax is being imposed on a loss-making industry like airlines. These taxes cannot be borneby loss-making airlines, hard-pressed passengers or their families, and will therefore lead to a dramatic fall in air traffic in Hungary at a time when Hungary’s tourism sector is preparing for post-Covid recovery.

At a time when many other EU countries are lowering taxes and fees to recover traffic, tourism and jobs, the Hungarian Govt. is doing the opposite by making air travel to/from Hungary more expensive and less competitive, which will damage Hungarian air-traffic, tourism and jobs recovery. We call on Minister Nagy to reverse this idiotic ‘excess profits’ tax, or at least confine it to industries like oil or gas who are making windfall profits, and not airlines who are reporting record losses”.

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Ryanair Holdings plc has released its May traffic statistics as follows:

Ryanair operated over 88,400 flights in May.

¹ Dec, Jan and Feb traffic was damaged by Omicron restrictions.

² Mar traffic was damaged by the Russian invasion of Ukraine on February 24.

In other news, Ryanair on June 1celebrated its 10th anniversary of operations at Cologne/Bonn Airport with an exciting summer schedule that includes 38 routes to destinations such as Budapest, Lisbon and Palermo. The five Ryanair aircraft are based in Cologne/Bonn.

Since beginning operations at Cologne/Bonn Airport in 2012 and opening the base in 2014, Ryanair has flown more than 14 million passengers to/from Cologne/Bonn, bringing significant benefits to the local economy.

Ryanair’s summer timetable to Cologne/Bonn offers residents of the region a wide range of summer holiday destinations, including the new routes to Biarritz, Rome and Stockholm, or a city trip to Athens, Copenhagen or Vienna. Visitors from the main markets can visit Cologne, in the heart of North Rhine-Westphalia, with its vibrant atmosphere. Discover the architecture with an impressive history and take advantage of numerous cultural offers along the Rhine.

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Ryanair Holdings today (May 16, 2022) reported a full year loss of €355m (pre-exceptionals), compared to a PY loss of €1,015m.

* Non-IFRS financial measure, excl. €114m except. unrealised mark-to-market net gain on jet fuel caps.

During FY22:

• Ryanair’s CDP[1]climate protection rating improved from “B-” to “B”.
• Sustainalytics[2] ranked Ryanair the No.1 EU airline & No.2 World airline for ESG.
• Traffic recovered strongly to 97.1m from 27.5m.  (Still 35% behind pre-Covid)
• Ave. fares fell 27% to just €27 due to Covid, Omicron & the Ukraine invasion.
• 61 B737-8200 “Gamechangers” delivered up to 31 Mar. (500 SH aircraft at year-end).
• 770 new routes & 15 new bases were announced for the coming year.
• Fuel well hedged at significant discount to spot prices (FY23 80%; H1 FY24 10%).
• S.22 capacity at 115% of S.19 (pre-Covid) levels – but recovery is ‘fragile’.

Ryanair’s Michael O’Leary, said:

ENVIRONMENT:

“Every consumer who switches to Ryanair from EU legacy airlines can cut their CO₂ emissions by up to 50% per flight.  Over the coming 5-years we expect our traffic to grow by 50% to 225m p.a.  This growth will be delivered at lower fares but on a fleet of new B737 “Gamechanger” aircraft, which offer 4% more seats, yet burns 16% less fuel and reduce noise emissions by 40%.

Our work with the EU, fuel suppliers, and aircraft manufacturers to accelerate sustainable aviation fuel (SAF) supply continues, in partnership with Trinity College’s Sustainable Aviation Research Centre.  Ryanair hopes to power up to 12.5% of our flights using SAF and cut our CO₂ per pax/km by 10% to under 60 grams by 2030.  Last month we announced a partnership with Neste to power up to one third of our flights from Schiphol (Amsterdam) with a 40% SAF blend.  We expect to establish similar partnerships across our network over the coming years.  We are working with A4E and the EU to accelerate reform of the Single European Sky, to promote ATC efficiency and cut delays which will reduce fuel consumption, CO₂ emissions and flight delays.

Ryanair published our “Aviation with Purpose” sustainability report setting ambitious environmental and social targets over the coming decade and mapping out Ryanair’s path to net carbon zero by 2050.  Our environmental strategy has enabled CDP to upgrade Ryanair’s climate protection rating to B from B- in Dec. 2021.  Our goal remains to achieve an “A” rating within the next 2 years.  Last month, Sustainalytics improved Ryanair’s ESG rankings to No.1 airline in Europe and the No.2 globally.

SOCIAL:

Our growth plans to 2026 will see Ryanair create over 6,000 well-paid jobs for highly skilled aviation professionals all over Europe.  Last autumn Ryanair invested €50m in a cutting-edge Aviation Skills Training Centre in Dublin and we plan to invest over €100m in 2 more, high skills, training centres (one in the Iberian Peninsula and one in CEE) during this period.  To facilitate this growth, Ryanair ordered up to 8 CAE full flight simulators (at a value of over $80m) and the first of these new sims delivers this summer.  We have also invested in new hangar maintenance facilities in Kaunas and Shannon and agreed a 5-year maintenance contract with Joramco in Jordan.

Despite the recent disruption of our traffic recovery by both the Omicron variant and the Russian invasion of Ukraine, we remain committed to restoring the pay cuts we agreed with our people during the Covid shut downs.  We have made some progress with pilots and cabin crew in certain markets on partial restorations in 2022.  But, in other markets the slow pace of union negotiations have hindered this acceleration of similar restorations.  We remain committed to delivering the first tranche of our agreed 3-year restoration plan as agreed in July 2022 and we are prepared to accelerate years 2 and 3 into one restoration in July 2023 if Ryanair returns to pre-Covid load factors and profitability during y.e. Mar. 2023.  We are committed to the full pay restoration for all our people as soon as our business returns to pre-Covid profitability.

The Ryanair Customer Panel met twice over the last year, providing valuable insights and constructive suggestions to improve our customer service.  We have implemented many of these suggestions, including a Day of Travel service in the Ryanair App which assists our guests with live updates through every step of their  journey, a new travel wallet for accelerated refunds and an online self-service hub.  Later this summer we will introduce more service improvements, including auto check-in and airport express to facilitate faster journeys through airports. Our winning formula of the lowest fares, the most on-time flights, industry lowest CO₂ emissions and friendly customer service saw Ryanair’s customer satisfaction (“CSAT”) scores rise significantly in FY22.

EU OWNERSHIP & CONTROL:

Ryanair’s EU ownership has increased from approx. 32% at 31 Mar. 2021 to approx. 41% at 31 Mar. 2022.  In the wake of Brexit, and the treatment of UK nationals as non-EU shareholders from 1 Jan. 2021, Ryanair has worked hard to grow its EU shareholder base.  During the past year, Ryanair increased its EU investor relations activity, delisted from the London Stock Exchange, and forced sell downs where non-EU investors incorrectly (post 1 Jan. 2021) purchased ordinary shares instead of ADRs (listed on NASDAQ) and who subsequently failed to comply with a Ryanair issued disposal notice.  Such actions, coupled with a suspension of voting rights of non-EU shareholders, enable Ryanair to protect its EU airline licenses post-Brexit.  We expect these voting restrictions will remain in place for the near-term future until a 50%+ EU shareholding is restored, or the EU and UK agree a less restrictive airline ownership and control regime than the current 50%+ nationality rule (which dates back to the 1940s).

GROWTH:

Over the past year our New Route team continued to work with airport partners to negotiate lower costs, Covid recovery incentives and growth deals.  In addition to 15 new bases (Agadir, Billund, Chania, Corfu, Cork, Madeira, Newcastle, Nuremberg, Riga, Stockholm, Venice (Marco-Polo), Venice (Treviso), Turin, Zadar & Zagreb), 770 new routes were announced and low-cost long term growth deals were extended at London Stansted (to 2028), Milan Bergamo (2028), Manchester (2028), East Midlands (2028) and Brussels Charleroi (2030).  Our Group has doubled its capacity in Rome (FCO), Lisbon, Vienna and has based a record 33 aircraft in Dublin for S.22, launching our biggest ever Dublin summer schedule.

The Covid-19 crisis accelerated the collapse of many European airlines including Flybe, Norwegian, Germanwings, Level, Stobart and material capacity cuts at many others including Alitalia (now ITA), TAP, LOT, SAS, etc.  The tsunami of State Aid from EU Govts. to their insolvent flag carriers (Alitalia, Air France/KLM, Iberia, LOT, Lufthansa, SAS, TAP and others) will distort EU competition and prop up high cost, inefficient, flag carriers for some years.  Ryanair was one of very few airlines during the Covid crisis to place significant new aircraft orders, to expand our airport partnerships, secure lower costs so that we can pass on even lower fares on many new routes during the post Covid recovery.  Over the past 2 years, Ryanair’s market share has increased markedly across Europe.  Notable examples include Italy where our market share increased from c.30% (pre-Covid) to almost 40% this summer.  Market share in Vienna has jumped from 8% (S.19) to 21% (S.22).  In Budapest (a competitor’s home base) we have gone from 18% to over 30% (and market leadership), Ireland rose from 49% to over 55%, Sweden doubled to 12% and Poland has grown from 25% to 35%. Up to March 2022, Ryanair has taken delivery of 61 B737-8200 “Gamechanger” aircraft and we hope to increase this to over 70 new aircraft for peak S.22 (more than the 65 previously targeted) to facilitate S.22 recovery and growth opportunities.  This Summer, our capacity will grow to approx. 115% of S.19 (pre-Covid) levels although we expect to fill these flights with lower fares and at higher fuel costs than pre-Covid.  Our new, fuel efficient, “Gamechangers” widen the cost gap between Ryanair and all other European airlines for the next decade. Their operational reliability, lower fuel consumption and CO₂ emissions have so far exceeded expectations, with very positive feedback from both passengers and our crews.  Based on our 210 order book and available fleet capacity, the Ryanair Group plans to accelerate traffic growth over the next 5 years.  From a pre-Covid figure of 149m, we now expect to grow (by 50%) to over 225m guests p.a. by FY26.

FY22 BUSINESS REVIEW:

Revenue & Costs

FY22 scheduled revenues increased 156% to €2.65bn.  While traffic recovered strongly from 27.5m to 97.1m guests, the delayed relaxation of EU Covid-19 travel restrictions until July 2021 (Oct. in the case of the UK Govt.), combined with the damaging impact of the Omicron variant and Russia’s invasion of Ukraine in H2, meant that fares required significant price stimulation.  Ave. fares in FY22 were down 27% to just €27.  Ancillary revenue delivered a solid performance, generating more than €22 per passenger as traffic recovered and guests increasingly chose priority boarding and reserved seating.  Total revenues increased by over 190% to €4.80bn.

While sectors increased almost 200% and traffic rose 253%, operating costs rose just 113% to €5.27bn (incl. a notable 237% increase in fuel to €1.83bn), driven primarily by lower variable costs such as airport & handling, route charges and lower fuel burn as 61xB737 Gamechangers entered the fleet (offset by the higher cost jet fuel).  Lower costs, coupled with rising load factors, saw FY22 (ex-fuel) unit cost per passenger reduce to €35.

Our FY23 fuel needs are approx. 80% hedged (65% jet swaps at c.$63bbl and 15% caps at c.$78bbl).  Almost 10% of Ryanair’s H1 FY24 fuel requirements are hedged at c.$76bbl (via jet swaps). Carbon credits are 85% hedged for FY23 at €53 (well below the current spot price of almost €90).  This very strong fuel hedge position gives Ryanair a considerable competitive advantage for the next 12 months and will enable us to grow market share strongly over the coming year.

Balance Sheet & Liquidity

Ryanair’s balance sheet is one of the strongest in our industry with a BBB (stable) credit rating (S&P and Fitch).  Year-end net debt fell to €1.45bn (prior year €2.28bn), and over 90% of the Group’s fleet of B737 aircraft are unencumbered.  We plan to reduce this net debt to zero over the next 2 years, despite peak capex during that time.  The strength of Ryanair’s balance sheet ensures that the Group is well poised to capitalise rapidly on the many growth opportunities that exist in Europe into the post Covid-19 recovery this year and beyond.

OUTLOOK:

While bookings have improved in recent weeks, the booking curve remains much closer-in than was typical (pre-Covid) at this time of year.  The damaging impact of the Omicron variant, and Russia’s invasion of Ukraine in Feb. means that Q1 pricing continues to need stimulation.  There is, however, pent-up demand and we are cautiously optimistic that peak S.22 fares will be somewhat ahead of peak S.19 (pre-Covid) levels.  Ryanair plans to grow FY23 traffic to 165m (up from 97m in FY22 and 149m pre-Covid) and will pursue its load active, yield passive strategy to achieve this growth.  While 80% of Ryanair’s fuel requirements are hedged well below current spot prices of over $100bbl, our unhedged 20% will give rise to some unbudgeted cost increases.

Despite limited H1 visibility (and almost zero H2 visibility), 20% unhedged fuel and the significant risks posed by both the invasion of Ukraine and Covid, we hope to return to reasonable profitability in FY23.  This recovery, however, remains fragile.  This was clearly evidenced by the sudden, and unexpected, emergence of the Omicron variant pre-Christmas and the Russian invasion of Ukraine in Feb., both of which immediately damaged close-in bookings and yields for the Christmas and Easter peak travel periods.  Given the continuing risk of adverse news flows on both these topics, it is impractical (if not impossible) to provide a sensible or accurate profit guidance range at this time”.

[1] CDP – Carbon Disclosure Project is an independent, non-profit, global environmental reporting organisation.

[2] Sustainalytics – a leading independent ESG & corporate governance research, ratings & analytics firm.

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Ryanair has announced a new winter maintenance agreement with UK MRO provider, STS Aviation Group, which will see the airline undertake two lines of heavy maintenance at their modern MRO facility in Birmingham.

Ryanair’s fleet will grow to over 600 aircraft over the coming years and this agreement will ensure that the airline has flexibility as to where it places its aircraft for upcoming winter maintenance seasons.

Ryanair uses a mix of internal facilities and external suppliers to conduct its heavy maintenance. Ryanair continues to invest in internal heavy maintenance facilities and this agreement will complement these facilities to ensure the maintenance requirements are more than met over the coming years.

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