Ryanair CEO pleased with bookings, concerned about oil price
Ryanair Group CEO Michael O'Leary expressed his satisfaction with the robustness of reservations for September and the early part of October. He believes that an increase in travel from Asia will contribute to the maintenance of elevated European ticket prices in the upcoming summer season. O'Leary shared these thoughts in an interview with Reuters.
O'Leary expressed his worry about the cost of oil while visiting Brussels. However, he stated that it was difficult to determine whether it would affect Ryanair's profit forecast for the year. Ryanair is considered Europe's leading airline in terms of passenger volume.
O'Leary expressed his satisfaction with the robustness of reservations for the upcoming months of September and October. He also stated that they are making good progress towards accommodating approximately 183-184 million travelers. This indicates that their performance is consistently surpassing the passenger volumes they had before the COVID-19 pandemic by around 20-23%.
"In August, we achieved an impressive 96% load factor, successfully accommodating 18.9 million passengers. Unfortunately, we were slightly held back from reaching the milestone of 19 million due to the unforeseen UK ATC failure," O'Leary expressed, alluding to the disruption in air traffic control services experienced in late August.
A capacity utilization rate of 96% indicates that, on average, only 4% of seats remained unoccupied throughout the month.
This summer, there was a significant increase in air travel between Europe and North America as people fed their desire to explore after the pandemic. However, the number of Asian travelers heading to Europe only managed to reach approximately 30% of what it was before the COVID-19 outbreak. This was partly because non-Chinese airlines faced restrictions in Russian airspace, which hindered their operations.
O'Leary predicts that there will be a partial rebound in Asian travel to Europe next summer, with approximately 60% of the pre-COVID levels being restored.
The airline from Ireland experienced a significant recovery in non-leisure travel towards regions in central, east, and south Europe with lower wages. Additionally, Morocco also witnessed this surge, which Ryanair's CEO, Michael O'Leary, credited to the growing trend of small European manufacturers opting for suppliers located closer to them, known as "nearshoring." This change has resulted in manufacturers replacing their Asian suppliers, leading to the boom in travel to these regions.
In order to manage the risk of oil prices, O'Leary mentioned that Ryanair has secured contracts for 85% of its fuel requirements until the conclusion of its fiscal year (FY) in March 2024.
"And currently, around 40% of our oil prices for the first half of fiscal year 2025 are secured. This means that from April to September 2024, approximately 40% of our oil prices are locked in at an average rate of $74 per barrel. We have strategically hedged our prices, ensuring they remain significantly lower compared to the current market rates," he mentioned.
"We'll keep a close eye on the situation. ... The aviation industry in Asia is experiencing a robust rebound. This is expected to positively impact air traffic throughout Europe during the summer of 2024. However, it is likely to result in an increased need for aviation fuel," he mentioned.
Ryanair is extending its reach into Wizz Air's primary markets in central and eastern Europe. The company will be venturing into Albania, as well as enhancing its presence in Romania, Hungary, and Poland this upcoming winter season.
"We're making significant progress in expanding our presence in Eastern Europe. We have plans to introduce approximately 20 new routes to Tirana, which currently falls under the purview of Wizz Air. However, it should be noted that they are levying considerably higher prices," remarked O'Leary.
According to him, it appears that on a broader scale, the current trend is that we are entering their markets more and they are progressively withdrawing towards the eastern regions and the Middle East.
(Written by Conor Humphries; Edited by William James, Helen Popper, and Mark Porter)