Ryanair Holdings Plc took a cautious view on the pace of the travel rebound, saying it will cut prices to stimulate demand this quarter while more countries consider removing Covid-19 travel restrictions.
Though bookings are improving, most are still last-minute, and investors should expect further disruption before Europe is through the pandemic, the region’s biggest discount airline said Monday. The Irish company said it’s in “growth mode” but that the timing of the recovery remains unpredictable.
“It’s correct to be cautious for the remainder of this financial year as there may be another twist in Covid,” Chief Financial Officer Neil Sorahan said in an interview. “It has taken us by surprise a couple of times. But we’re well placed to capitalize on the massive opportunities that exist.”]
Ryanair has set plans for an aggressive expansion as travel returns, with 720 new routes and 15 new bases announced for the fiscal year beginning in April.
Low-cost rivals EasyJet Plc and Wizz Air Holdings Plc said last week that they’re also boosting capacity as they target markets where network carriers are in retreat. The U.K., which loosened border rules this month, is emerging as a key battleground for Easter and early summer sales.
Ryanair posted a 96 million-euro ($107 million) loss for the December quarter after analysts had predicted a smaller deficit, and stuck with the more negative forecast for the year through March that it issued last month as the omicron variant wiped out the Christmas and New Year travel peak.
Ryanair shares traded 1.2% lower at 16.40 euros as of 8:16 a.m. in Dublin, where the company is based, paring the stock’s gains this year to 7.6%.
The carrier said it’s hopeful that European Union nations will follow the British lead in scrapping testing for vaccinated travelers in time to restore consumer confidence well in advance of Easter, which falls in April.
Sorahan told Bloomberg Television that he’s seeing progress toward relaxed rules in Germany, Italy and Austria.
The CFO said that currently low ticket prices may strengthen once the rebound gets going, given the amount of capacity that’s exited the market during the crisis, making for “a relatively good summer.”
Dublin-based Ryanair said it’s taken delivery of 41 new Boeing Co. 737 Max jets with plans to add another 24 in time for summer, helping it to offer 14% more seating than in the peak period of 2019.
The carrier reiterated that it’s targeting an increase in passengers to 225 million a year by 2026 and said it now expects to create 6,000 more jobs over that period, up from 5,000 previously.
Ryanair will also work over the next two year to pare net debt that’s has risen to more than 2 billion euros. Bonds maturing in 2023 and 2024 will be repaid at least partly through the company’s own cash generation, Sorahan said.
He said the company is also very well hedged on fuel for the next 15 months, providing “great insulation,” while locked in labor costs and long-term deals with airports such as London Stansted struck earlier in the pandemic will help keep down expenses.