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Ryanair's Fortune Soars as Profits Skyrocket
Europe's top low-cost carrier, Ryanair, is gearing up for an impressive earnings record in the current fiscal year, following a prosperous summer quarter. The Irish powerhouse reported in Dublin that annual profits could hit between 1.85 and 2.05 billion euros, surpassing its all-time high of 1.45 billion euros set in 2018, barely missing the mark the previous year with a profit of 1.3 billion euros.
Shareholders are in for a delightful surprise as the airline now promises a regular dividend. A dividend payout of 400 million euros will be given out to shareholders in two equal installments, with a mid-year dividend of 200 million euros (€0.35 per share) and an end-year dividend of 200 million euros expected in September 2024. Ryanair plans to release 25% of the previous year's profits, adjusting for any one-time events, as a continuous dividend from now on.
In the past, the company has occasionally offered special dividends, a possibility that still exists, as well as potential share buybacks, according to the organization. The company's Board of Directors has made it clear that they will maintain this flexibility to distribute any surplus funds to shareholders via special dividends or share buybacks if necessary.
Is Boeing Delivering as Promised?
In the second quarter from July to September, Ryanair experienced a 23% revenue growth year-over-year, reaching 4.9 billion euros, mainly due to increased demand and higher ticket prices. Passenger counts rose by 11%, while ticket prices ascended by 14%. The bottom line saw Ryanair's profit jump by more than 40% to 1.5 billion euros. After accounting for special charges from the previous year, the increase amounted to an impressive 26%.
Despite its impressive financial performance, featuring a 23% revenue surge and over 40% profit ascent in the second quarter, Ryanair's profits are still influenced by the broader aviation sector. Ryanair, Europe's largest low-cost carrier, delivered record-breaking quarterly results.
Context: Boeing's delivery delays are significantly impacting Ryanair's passenger volume and financial performance in the current fiscal year.
- Passenger Volume Constriction:
- Ryanair revised its passenger traffic forecast for the second time in three months due to Boeing 737 MAX delivery delays. The airline now expects to carry 206 million passengers in the 12 months to March 2026, down from the previously estimated 210 million passengers.
- The airline is only anticipated to receive nine Boeing 737 MAX aircraft ahead of the peak summer season, which is fewer than initially expected, forcing the airline to reduce its passenger traffic estimates and eliminate approximately 10 aircraft lines of flying for the peak summer months of July, August, and September.
- Financial Struggles:
- Despite strong financial results in the third quarter of fiscal year 2025, including a profit after tax of €149 million and a 9% rise in passenger traffic to 45 million, the cumulative nine-month profit fell by 12% to €1.94 billion compared to the previous year due to an 8% decline in average airfares.
- Ryanair is providing guidance for after-tax profits between €1.55 billion to €1.61 billion for the financial year ending March 31, 2025. However, the profit guidance depends on avoiding negative impacts such as further Boeing delivery delays, conflicts in the Middle East and Ukraine, or air traffic control (ATC) problems.
- Operational Challenges:
- Ryanair is wrestling with operational challenges due to Boeing's production setbacks and regulatory scrutiny. The airline remains optimistic that the remaining 29 aircraft from its 210-plane Boeing 737 MAX order will be delivered before March 2026, allowing Ryanair to recoup its delayed traffic growth during the summer 2026 instead of summer 2025.
Overall, Boeing's delivery delays are constricting Ryanair's capacity to meet its passenger volume targets and are impacting its financial performance by reducing revenue and increasing operational costs.
