4th Dec 2023 10:59
(Alliance News) - Passenger numbers for November saw expected slowed growth for Ryanair Holdings PLC at the start of the winter season, according to Liberum analysis, while it was surprised by an acceleration for Wizz Air Holdings PLC, although it still saw the balance of risks being to the downside.
Both budget airliners said passenger traffic increased in November compared to a year before, despite flight cancellations to Israel amid the ongoing conflict.
Dublin-based Ryanair said that it carried 11.7 million passengers in November 2023, up 4.5% from 11.2 million in the corresponding month last year. Its load factor was unmoved at 92%.
On a rolling 12-month basis to October, Ryanair said it carried 180.8 million passengers, up 14% from 158.4 million the year before. The load factor improved to 94% from 91%.
Ryanair added that it operated over 66,400 flights in November, but noted that over 960 flights were cancelled due to the Israel/Gaza conflict.
Liberum said volume growth had slowed significantly from the 9% to 13% run rate seen through the summer season, although Liberum anticipated this "now that the winter season has started".
"This is consistent with our assumptions for [the first half] and management's [full-year] guidance. We expect Ryanair to continue to thin out its flying schedule on weaker days of the week through the winter season," said Liberum analyst Gerald Khoo.
Meanwhile, Budapest-based Wizz Air said it carried 4.8 million passengers in November, up 29% from 3.7 million the year prior. Capacity for the month was also 29% higher at 5.4 million seats.
Its load factor improved year-on-year to 88.4% from 88.1%.
The Hungarian airline said that it has decided to suspend operations in Israel until early January, adding that it continues to monitor the situation and "stands ready to redeploy capacity should conditions stabilise."
"The acceleration in both passenger and capacity growth in November compared with the trend of recent months surprised us," said Liberum's Khoo.
"This comes against a tougher comparative and management had guided to capacity growth slowing as [geared turbofan]-related groundings gather pace (albeit with the bulk of the impact falling in the next quarter). The flat load factor compared to the mid-single-digit improvements seen in recent months is consistent with this acceleration of growth."
Despite the surprising acceleration in passenger and capacity growth, Liberum said it still saw the balance of risks being to the downside with faster growth and flat load factors, although noting there was "as usual" no commentary on unit revenues.
Liberum backed Ryanair with a 'buy' rating, setting a target price of EUR24. This represents a 34% upside to its current share price of EUR17.93, which was down 0.1% in Dublin on Monday morning.
Meanwhile, Liberum gave Wizz Air a 'hold' rating, setting a target price of 1,700 pence. This represents a 12% downside to its current price of 1,930.50p in London, down 0.8%.
Looking across the airline industry, Deutsche Bank said 60-day-out fares in November for travel in January were up 4% from a year earlier, compared to a 3% fall in October and a 2% rise in September.
"[This supports] the idea suggested in our previous edition that fares in general are a bit capped out versus a year ago in the absolute peak travel periods (eg in August and around Christmas), but that airlines are finding year-on-year gains still in the off-peak," said Deutsche Bank.
"In terms of where the incremental change is coming from: it is fairly evenly spread across the various market segments with the exception of business class on the Transatlantic, where fares have remained flat year-on-year; by airline, easyJet, Ryanair and AF-KLM fares show the greater improvements."
In absolute terms, Deutsche Bank said intra-European fares continue to enjoy healthier year-on-year premiums in January, up 9%, compared to long-haul fares, which show "limited" improvement.
By airline, Deutsche Bank singled out easyJet PLC and Ryanair from the short-haul low-cost carriers, and Deutsche Lufthansa AG in the long-haul, as "seem[ing] to have the healthiest trends".
Shares in easyJet were down 0.1% to 472.50 pence each in London on Monday morning, while Lufthansa shares were up 1.0% to EUR8.31 each in Frankfurt.
By Greg Rosenvinge, Alliance News senior reporter
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