No one has ever called Ryanair or its colorful CEO Michael O’Leary bashful, and that’s proving to be true as European travelers slowly return to the sky. The discounter has big ambitions to grow and capture a larger share of the market, especially as many of the continent’s big names retrench.
“In my 30 years in this industry — post-9/11, post-Gulf War — there has never been a growth opportunity in front of Ryanair such as we have at the moment,” O’Leary said during the Dublin-based carrier’s fiscal year 2022 June quarter earnings call on Monday.
Those opportunities range from Italy, where the new national carrier Italia Trasporto Aereo (ITA) — created out of the best assets of Alitalia — will be at least a quarter smaller than its predecessor. To the Nordic countries, where Norwegian Air restructured as a drastically smaller airline and SAS has shrunk its fleet, and on to Portugal, where TAP Air Portugal plans a sizable reduction in its short-haul fleet. Ryanair estimates that these structural changes, plus expected reductions at Europe’s three big airline groups — Air France-KLM, IAG, and Lufthansa Group — could see the continent’s short-haul capacity reduced by as much as 20 percent through at least 2023. This outlook has the airline ready to roll the dice on massive growth that could see it grow by nearly 50 percent in just four years.
That growth is possible with Ryanair’s 210-aircraft strong orderbook for Boeing 737 Max 8-200s, the first three of which arrived in June. The airline plans to operate roughly 600 aircraft by 2026, up from 451 at the end of June.
“We are the only airline taking sufficient aircraft deliveries to take up those opportunities,” said O’Leary. And therein lies the rub: Ryanair’s management views the carrier as the only one in Europe able to fill that gaps left by competitors.
But whether Ryanair is the only airline capable of absorbing those opportunities is debatable. Wizz Air, another discount juggernaut with big growth ambitions, has outstanding orders for 242 Airbus A320neo family jets while EasyJet has another 108 orders for the A320neo family, according to Airbus’ orders and deliveries for June. The latter did shrink its by 10 percent to roughly 300 aircraft as a result of the Covid-19 pandemic but, like its competitors, plans to grow out of the crisis.
And among the legacy airline groups, Air France-KLM has orders for more than 100 Airbus and Embraer narrowbodies and a campaign for either A320neos or 737 Maxes; IAG has 53 Airbus jets on order and a letter of intent for 200 737 Maxes; and Lufthansa Group has orders for more than 100 Airbus narrowbodies.
In fact, the numbers show that Ryanair does not have the most outstanding aircraft orders — that crown goes to Wizz. However, the Hungarian carrier is starting from a much smaller base with just 137 aircraft at the end of March. And order numbers do not include planned retirements that will make actual fleet growth — especially at the big groups — lower than the headline number.
Ryanair must manage through the crisis before it can grow. On Monday, O’Leary opened his remarks by saying that the pandemic continues to “wreak havoc” on the airline’s business. The travel recovery is months behind the U.S. with Ryanair capacity down nearly 73 percent in the June quarter compared to two years ago, according to Cirium schedules. And its average load factor was just 73 percent during the period rather than the mid-90 percent range that it saw before the crisis.
But, if Europe maintains the pace of its vaccination programs and there are no further unforeseen Covid-19 setbacks, O’Leary is optimistic about the coming months. He estimated that the airline will carry 10 million passengers in August — double the number in June but still a third less than two years ago. And Ryanair capacity could meet or exceed pre-crisis levels by Summer 2022.
Financially, Ryanair forecasts a small loss or breakeven results for its 2022 fiscal year that ends in March.
In the June quarter, the airline lost €273 million ($322 million). Revenues decreased nearly 84 percent to €371 million and expenses by nearly two-thirds to €675 million compared to the same period in 2019. Ryanair had €3.6 billion in cash and cash equivalents at the end of June.