25th Jul 2022 17:59
(Alliance News) - Ryanair Holdings PLC reported a swing to quarterly profit, though its update on Monday offered plenty of food for thought for the travel sector.
Airports have faced unprecedented disruption in recent weeks and months. Carriers and cargo firms slashed jobs in the wake of the Covid-19 pandemic and have struggled to keep up with a pick-up in demand as virus curbs across the globe eased.
"Our business, our schedules and our customers are being disrupted by unprecedented [air traffic control] and airport handling delays," Ryanair warned.
It did say it is confident it can operate near 100% of its scheduled flights, however.
Still, the threat of disruption looms over the travel sector.
AJ Bell analyst Russ Mould commented: "The industry really needs these problems ironed out as soon as possible if it is to avoid hard-pressed households being put off the idea of flying on holiday by the stress and hassle of being unsure if they'll get away, and the prospect of lengthy airport queues."
"Ryanair's results did reveal a healthy enough profit for the three months to the end of June amid significant pent-up demand," Mould added, however.
For the three months to June 30, revenue was EUR2.60 billion, multiplied from EUR370 million in the first quarter last year. This helped swing the Dublin-based carrier to a profit after tax of EUR170 million from a EUR273 million loss a year before.
Looking ahead, Ryanair said it could not "ignore the risk" of new Covid variants in Autumn. The carrier pointed to its experience with Omicron last November and the Ukraine invasion to demonstrate how "fragile the air travel market remains". Ryanair said the strength of any recovery will be dependent on there being no adverse or unexpected developments over the remainder of financial 2023.
The airline said it is "clear signs of pent-up demand". Average fares in the second quarter of its financial year are tracking ahead of pre-Covid levels by a low double-digit percentage, having been 4% down in the first quarter.
However, bookings remain closer-in than normal, leaving the company with "almost zero visibility into H2".
Analysts at Davy said Ryanair's outlook is positive, though it comes "with caveats".
"industry is faced with passing through large input cost increases - with the best fuel and ex-fuel position in the industry, industry capacity continuing to be pulled back and market demand very strong but volatile, it remains to be seen were this leads as we head to the winter," Davy said.
easyJet PLC reports a trading statement on Tuesday.
AJ Bell analyst Danni Hewson commented: "Airlines, airports and travel companies will have to think hard about pay, conditions and extra perks that might pull new talent in and prevent current staff from walking out. Ryanair's better than expected performance came with a warning that recovery is fragile and with EasyJet posting its update tomorrow investors will get a little more insight into what the next six months has in store."
By Eric Cunha; [email protected]
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