A SNAPSHOT IN TIME: Ryanair's November Network

It is winter schedule time again in the Northern Hemisphere and once again Ryanair’s unequivocal Chief Executive Officer, Michael O’Leary has this week once again announced plans for the Irish budget carrier to ground part of its fleet until the sun rises again in the spring.  The issue of seasonality in demand has been a problem the aviation business has been fighting for years but like most things Ryanair takes it to a new extreme.  The airline says up to 80 Boeing 737-800s will be parked at airports across Europe this winter to “to limit the impact of high oil prices, high airport fees at Stansted and Dublin, and seasonally weaker demand and yields upon the business”.

This means the airline’s performance during the second half of its financial year is forecast to be “broadly flat,” according to the carrier, after what to date has been an impressive performance.  For the first half of the year (the six months until September 30, 2012) the carrier has reported a ten per cent increase in after tax profits on the same period last year, reaching to €596 million.  This was supported by 15% revenue growth to €3.11 billion and a seven per cent traffic growth to 48 million passengers.  This positive result is despite an eight per cent increase in costs, mainly attributed to a 24 per cent (€218 million) rise in fuel.

According to Michael O’Leary, the airline’s profits even exceeded his own high expectations and were driven by a combination of strong summer bookings, particularly post the Olympics, a six per cent rise in average fares, and a lower than forecast fuel bill due to the implementation of a fuel savings programme.  “Our ten per cent profit increase in H1 combined with traffic growth of 7% during a period of high oil prices and continuing recession\austerity in Europe was another robust result,” he said at a London press conference revealing the results this week.

The airline’s network strategy plays an integral part in its performance and during this six month period 158 new routes were introduced, increasing the airline’s daily schedule to more than 1,500 flights, operated by 298 strong fleet of 737-800s.  While rivals have fallen, Ryanair has been able to identify profitable opportunities where its business model can succeed where legacy carriers struggle.  “Our new bases in Budapest and Warsaw have stimulated strong demand at Ryanair’s very low fares while expansion of existing bases in Spain, the UK and Germany has delivered impressive volume and profit growth,” said O’Leary.

So while dark clouds continue to envelope the industry, what is the outlook from Ryanair?  Well, the carrier said it expects market conditions in Europe “to remain tough” as recession, austerity, high fuel costs, and Government taxes dampen air travel demand, warning that “further airline failures and consolidations are inevitable”.  These collapses, says the airline, will provide opportunities for the carrier to continue its growth and it continues to forecast handling more than 120 million passengers a year by the early 2020s, subject to overcoming regulatory obstacles that continue to limit the potential for air travel to stimulate economic activity.

Ryanair now accounts for around 12 per cent of Europe’s short-haul air travel market and despite its capacity reduction through the winter it still expects to handle around 79 million during the full financial year, up four per cent on last year.  Despite a “cautious” outlook on winter trading the carrier has raised its full year profit guidance from its previous range of €400 million to €440 million to a new range of €490 million to €520 million, an unbelievable performance when you consider the high losses being reported by many other airlines across the globe.

In the table below we highlight the Ryanair’s network of scheduled flights this month and compare this with the same month last year.  Overall seat capacity is up 3.5 per cent in November 2012 versus the same month last year, with strong growth at a number of primary and secondary airports, including London Stansted, Barcelona El Prat, Niederrhein Weeze, Palma Son Sant Joan and Manchester. 

The strong network development at its new bases at Budapest and Warsaw Modlin have also seen both facilities entering the twenty largest airport list this month, at 9th and 18th place in the analysis.  The statistics also show where the Irish budget carrier has scaled-back its capacity since this time last year with Madrid Barajas, Rome Ciampino, Liverpool John Lennon and Seville San Pablo all reporting significant capacity declines.

RYANAIR SCHEDULED AIR SERVICES (non-stop departures; November 2012)

Rank

Airport

Departures

Available Seats

% Network Capacity

Seat Change Capacity (vs 2011)

1

London Stansted (STN)

2,980

563,220

9.3 %

13.0 %

2

Dublin (DUB)

1,694

320,166

5.3 %

(-1.9) %

3

Bergamo Orio al Serio (BGY)

1,649

311,661

5.1 %

(-2.8) %

4

Brussels Charleroi (CRL)

1,310

247,590

4.1 %

8.1 %

5

Barcelona El Prat (BCN)

1,276

241,164

4.0 %

17.3 %

6

Madrid Barajas (MAD)

1,040

196,560

3.2 %

(-18.9) %

7

Rome Ciampino (CIA)

956

180,684

3.0 %

(-25.6) %

8

Paris Beauvais (BVA)

823

155,547

2.6 %

1.6 %

9

Budapest Liszt Ferenc (BUD)

584

110,376

1.8 %

New Entrant

10

Pisa Galileo Galilei (PSA)

546

103,194

1.7 %

9.4 %

11

Frankfurt Hahn (HHN)

522

98,658

1.6 %

(-0.4) %

12

Bologna Guglielmo Marconi (BLQ)

492

92,988

1.5 %

2.5 %

13

Porto Francisco Sá Carneiro (OPO)

480

90,720

1.5 %

(-5.3) %

14

Niederrhein Weeze (NRN)

475

89,775

1.5 %

15.0 %

15

Palma Son Sant Joan (PMI)

474

89,586

1.5 %

72.4 %

16

Stockholm Skavsta (NYO)

447

84,483

1.4 %

(-7.6) %

17

Malaga Pablo Ruiz Picasso (AGP)

436

82,404

1.4 %

10.4 %

18

Warsaw Modlin (WMI)

429

81,081

1.3 %

New Entrant

19

Bari Palese (BRI)

423

79,947

1.3 %

(-4.1) %

20

Moss Airport, Rygge (RYG)

422

79,758

1.3 %

3.7 %

21

Treviso Sant’Angelo (TSF)

419

79,191

1.3 %

New Entrant

22

Manchester (MAN)

411

77,679

1.3 %

12.6 %

23

Liverpool John Lennon (LPL)

410

77,490

1.3 %

(-17.3) %

24

Girona Costa Brava (GRO)

398

75,222

1.2 %

11.8 %

25

Seville San Pablo (SVQ)

395

74,655

1.2 %

(-16.8) %

(Others)

12,673

2,395,197

39.4 %

(-4.2) %

TOTAL

32,164

6,078,996

-

3.5 %

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