Ryanair warns days of cheap fares are coming to an end

Ryanair swung back into profit in its first quarter but with continued uncertainty over the Ukraine war and Covid-19. Europe’s biggest budget carrier warned “the days of E9.99 fares are probably coming to an end”.The Dublin-based airline posted profit before exceptional items of €170mn in the three months to June, from a loss of E273m in the same period last year and well above the consensus market forecast of E157m. However, that was still well below the E243m pre-pandemic profit in the first quarter of the 2020 fiscal year. CE Michael O’Leary warned that the war and potential for new Covid-19 outbreaks ahead meant the recovery was “strong but still fragile”. Nevertheless, Ryanair has locked in cost savings and had secured a “massive competitive advantage” through fuel and other hedging, CFO Neil Sorahan said. In addition, Ryanair is taking delivery of 50 new Boeing 737 higher-efficiency, lower-emission aircraft this winter, “so I believe we’ll perform well in a recession, if there is one”, he added. While Ryanair is not cancelling flights, Sorahan warned that air traffic control and other airport problems meant passengers could still expect summer delays at European airports that have inflicted misery on holidaymakers in recent weeks. He suggested passengers will also have to get used to higher fares. “Fuel has gone from $40 a barrel to over $100 a barrel. So it’s not credible that we will continue to offer those kinds of terms in a high-fuel environment,” he said. “The days of the €9.99 fares are probably coming to an end.” Passenger numbers reached 45.5m in Q1, and the airline had its busiest month ever in June. Sorahan said Ryanair remained on track to reach 165mn passengers this financial year.<br/>