Ryanair warns new COVID variants will hit airlines and travel

Ryanair shares fell despite the return to profit. Photo: Horacio Villalobos#Corbis/Corbis via Getty

Shares of Irish airline Ryanair (RYA.IR) traded lower on Monday despite returning to profits as the travel chaos and covid variants darken his forecast beyond the summer holidays.

The Dublin-based low-cost carrier beat analysts’ expectations, posting a first-quarter profit of €170m ($173m, £145m) for the three months to June 30 thanks to pent-up demand from vacationers. This compared to a loss of 273 million euros the previous year.

But the airline has warned of a “fragile” recovery as threats from the coronavirus pandemic and the Ukrainian War continue to weigh on the aviation industry and passenger travel plans.

“The winter recovery is fragile and very subject to news flows around COVID and Ukraine,” chief financial officer Neil Sorahan said in an interview Monday.

It comes as several strains of the fast-spreading Omicron variant have already been detected this year, leading to increased infections and hospitalizations in some countries, including the UK.

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Europe’s biggest low-cost carrier said passengers were booking trips much closer to travel dates than before the pandemic, limiting demand visibility for September and “almost zero” for winter, when she tends to lose money.

Despite this, it is sticking to plans to increase capacity beyond pre-pandemic levels, even as other airlines cut schedules to deal with staff shortages after weeks of delays and cancellations.

Ryanair is increasing its capacity by 15% above the 2019 level this summer in a bid to gain market share.

Passenger numbers recovered to 45.4 million in the first quarter from 8.1 million in the same period last year. It plans to fly 165 million people in the year starting from April 1, seeking to fill low-cost planes.

The company’s shares fell 0.9% in early trading in Dublin on Monday, down 0.7% at the time of writing.

According to the group, profits were still “well below” the levels seen in the same quarter before the COVID crisis despite the rebound.

He added that the Ukraine conflict had “severely damaged” Easter bookings and rates, which fell 4% from the same quarter before COVID, although average rates for summer were higher over three years. of a “low double-digit percentage”.

CEO Michael O’Leary said he was hampered by “unprecedented” disruptions to air traffic control and airport management, but hoped to deliver “nearly 100%” of its scheduled flights and minimize delays. He expressed concerns about new variants of the coronavirus.

O’Leary said: “While we remain hopeful that the high rate of vaccinations in Europe will allow the airline and tourism industry to fully recover and finally put COVID behind us, we cannot ignore the risk of new COVID variants in the fall of 2022.

“Our experience with Omicron last November and the invasion of Ukraine in February show how fragile the airline market remains, and the strength of any recovery will depend heavily on the absence of adverse or unexpected developments during the remainder from 2022-2023.”

The airline also warned that soaring oil prices are expected to drive up its fuel bill for the full year, affecting 20% ​​of its fuel costs which were not secured in advance.

“The golden age of cheap air travel is over thanks to oil prices and inflation that have hit decade-long highs,” said Allegra Dawes, senior analyst at global primary research firm Third. Bridge.

“However, Ryanair’s fuel hedging policy means they are better placed to maintain price competitiveness and less under pressure to increase fares over the next 12 months.”

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