Ryanair CEO pleased with bookings, concerned about oil price
Ryanair Group CEO Michael O'Leary expressed his contentment with the robustness of September and October reservations and believes that the revival of travel from Asia will contribute to sustained high ticket prices in Europe during the upcoming summer season, as he revealed in an interview with Reuters.
During a recent trip to Brussels, O'Leary expressed his worries regarding the oil prices. However, he remains uncertain of its effect on Ryanair's profit forecast for the year. Ryanair, being the largest airline in Europe in terms of passenger numbers, could face potential implications from the fluctuating oil prices.
O'Leary expressed his delight in the robustness of the reservations for September and October. He affirmed that they are making significant progress in achieving a passenger count of approximately 183-184 million, surpassing their pre-COVID figures by about 20-23%.
"We achieved an impressive 96% load factor during August, accommodating 18.9 million passengers. Our numbers would have surpassed 19 million if it hadn't been for the unfortunate air traffic control failure in the UK," commented O'Leary, mentioning the occurrence of a chaotic situation with the air traffic control system in late August.
A 96% load factor indicates that, on average, only 4% of seats remained unoccupied throughout the month.
This summer, there was a significant increase in air travel between the continents of Europe and North America as people were eager to explore after the pandemic. However, the number of Asian travelers heading towards Europe only managed to reach about 30% of what it used to be before COVID-19. This was partly because Russian airspace was inaccessible to airlines from countries other than China.
O'Leary anticipates that the number of Asian tourists traveling to Europe will bounce back to approximately 60% of its pre-COVID levels during the upcoming summer.
Ryanair, the airline from Ireland, experienced a remarkable resurgence in business travel to economically disadvantaged regions in central, east, and south Europe, along with Morocco. Michael O'Leary, the CEO of Ryanair, credited this growth to the trend of smaller European manufacturers turning away from Asian suppliers and opting for nearby suppliers, resulting in a boost in travel to these areas.
In order to manage the uncertainty of oil prices, O'Leary mentioned that Ryanair had protected 85% of its fuel requirements until the conclusion of their fiscal year in March 2024.
"And at present, we have safeguarded approximately 40% of our resources for the initial half of FY 25. Thus, the duration from April to September 2024 is protected to the extent of around 40% at roughly $74 per barrel. Our hedging strategy persists in keeping us protected even when prevailing market prices are higher," he expressed.
"We will remain attentive. ... The aviation industry in Asia is making a strong recovery. This promising rebound is also expected to positively impact air traffic in Europe during the summer of 2024. Consequently, there is a likelihood that the demand for aviation fuel will increase," he remarked.
Ryanair is steadily gaining ground in the central and eastern regions of Europe, penetrating deeper into the primary markets of its competitor, Wizz Air. This expansion involves the group's entry into Albania, as well as increasing its presence in Romania, Hungary, and Poland during the upcoming winter season.
"We are making strong progress in our expansion towards eastern Europe. ... We are planning to introduce approximately 20 new flight routes to Tirana. Currently, Wizz dominates the market there, but their ticket prices are significantly higher," stated O'Leary.
According to him, it appears that at a larger scale, we're witnessing a movement where we are progressing into their markets while they are withdrawing towards the eastern and Middle Eastern territories.
(Written by Conor Humphries; Edited by William James, Helen Popper, and Mark Porter)