Ryanair Suggests Growth Could Return at Stansted and Dublin

Irish ultra low-cost carrier Ryanair has revealed that it could resume network growth at both Dublin and London Stansted airports from September this year should it agree a new deal with the airports’ management teams.  The budget operator also highlighted that “significant opportunities” are opening up in Germany, Scandinavia and central Europe, while Spain is once again on its growth radar.  The route plans emerged after the carrier announced record annual profits of €569 million, up 13 per cent on last year despite higher oil costs.  Revenues also rose by 13 per cent to €4.88 billion as traffic grew 5 per cent to 79.3 million.

Over the last financial year (12 months until March 31, 2013), Ryanair opened a total of 217 new routes and expanded its total network to over 1,600 airport pairs.  In the course of the year it opened seven new operational bases - Chania (Greece), Eindhoven (Netherlands), Fez (Morocco), Krakow (Poland), Maastricht (Netherlands), Marrakech (Morocco) & Zadar (Croatia) – and took delivery of 15 new aircraft, expanding its Boeing 737-800 fleet to 305 units.  However, as per its normal strategy notable network cuts were made during the year, especially in the winter schedule when 80 aircraft were grounded due to seasonal demand.

“We are in active discussions with the new owners of Stansted Airport and the new management at Dublin Airport and while no agreements have yet been reached, if a competitive cost base emerges, then we could restart growth at one or other airports as early as September 2013.”

Michael O’Leary
Chief Executive Officer, Ryanair

This summer Ryanair says growth will be “modest” as just nine (net) new aircraft and many longer flight sectors will mean network capacity will grow just two per cent.  But, by grounding fewer aircraft next winter Ryanair expects to deliver slightly faster H2 monthly growth which should result in overall traffic growth for the full year rising by more than 2 million to 81.5 million passengers.

“Forward bookings on our new routes and bases this summer are ahead of expectations (albeit at modest yields) as competitor airlines continue to restructure and cut short-haul capacity.  We expect growth opportunities for Ryanair to expand and improve for the foreseeable future,” said Michael O’Leary, Chief Executive Officer, Ryanair.

Ryanair’s network development teams “continue to handle more growth opportunities than our current fleet expansion allows,” according to O’Leary, but are seeing “significant opportunities” in Germany, Scandinavia and central Europe in particular, where “airberlin, SAS and LOT continue to restructure,” he adds.

Ryanair now claims to be the number one passenger airline in Italy and Poland, where it says it has overtaken both Alitalia and LOT Polish Airlines in scale.  It believes that its low-cost advantage will enable it to achieve a 20 per cent share of the European short-haul market over the next five years, particularly given that many of Europe’s high fare incumbents are restructuring and cutting capacity.  The arrival of 175 additional 737-800s from autumn 2014 to the end of 2018 will support this development as the carrier seeks to grow the business to over 100 million passengers per annum over the next five years.

Meanwhile, it appears frosty relationships with airports across Europe are also beginning to thaw.  “We are in active discussions with the new owners of Stansted Airport and the new management at Dublin Airport and while no agreements have yet been reached, if a competitive cost base emerges, then we could restart growth at one or other airports as early as September 2013,” explains O’Leary.

“We have also made offers to the Spanish airport monopoly AENA to reverse a significant proportion of its traffic declines over the past two years.  In a country where youth unemployment runs at 50 per cent, their policy of increasing airport fees, while traffic declined from over 220 million to just under 180 million over the past two years is plainly ill-judged.  As ever, Ryanair remains willing to exploit growth opportunities wherever airports provide attractive incentives to do so,” he adds.

Looking ahead Ryanair expects 2013/2014 traffic to grow by 3 per cent to 81.5 million.  Growth, it says, will be slower in the first half at approximately two per cent, but will rise to approximately five per cent in the second half as it reduces the number of aircraft it parks for the winter.  According to the carrier this is likely to see around a 20 to 25 per cent reduction in grounded aircraft although approximately 60 aircraft could still be taken out of the fleet during the season. 

With almost zero yield visibility into the second half and the EU wide recession, Ryanair says there will continue to be “downward pressure on yields which will dampen full year profit growth”.  But, it still expects modest yield and traffic growth for the full year, albeit this will be partly offset by higher oil and Eurocontrol costs and suggests annual profits will be in the region of €570 million to €600 million, subject to winter yield outturns.