Ryanair flies high with record profits – and a big hike in fares

There are only three certainties in life: death, taxes and Ryanair ending up on top.

The low-cost (but we’ll get to that) airline proved that yet again with its latest results. Profits rolled in at €2.18bn (£1.9bn) for the six months to the end of September, 59 per cent ahead of its previous record for the period.

With the group’s second half being the slow one for the industry (because, winter), the full-year number is expected to land between €1.85bn and €2.05bn. However, that too represents a record, roughly half a billion euros ahead of its previous best posted in the pre-pandemic year of 2018.

The pandemic still looms large over these results, and the airline industry as a whole. The fallout from Covid has been brutal. The year kicked off with the demise of Flybe, the second time in three years that particular airline had found itself grounded in financial hell. It was followed three days later by Flyr, a Norwegian outfit. In fact, allplane.tv, a website which has been keeping a running total, lists 11 failures worldwide this year. Since the pandemic, more than 60 airlines have been grounded and the number is still growing.

The reasons aren’t hard to discern: this is an industry that has long been prone to shaky finances, regular crises and sudden collapses. No wonder it is often said that the best way to become a millionaire is to start your own airline while a billionaire. It is for this reason that packing good travel insurance is as important as your sunscreen, a mobile phone roaming plan and a toothbrush.

The mass clearout that was the result of Covid has left the strong, financially stable carriers in an enviable position and Ryanair has never really been out of that category. The ruthlessness with which it has been run by Michael O’Leary, a man who has seemingly never encountered a fight he didn’t want to engage in, whether with regulators, politicians, unions, the EU, multiple governments and (sometimes) even his own customers, has served the company well.

Love him or loathe him, one thing no-one can deny is O’Leary’s formidable business savvy. The financial strength he has built is now paying dividends. Literally for the group’s shareholders, with the announcement of a regular payout for the first time, amounting to 25 per cent of the group’s post-tax profits going forward. Ryanair has previously relied upon buying back its shares to return cash to investors accompanied by irregular special dividends paid when the sun has been shining on the airline. The regular payment is a fine reward for the investors who kept the faith and backed the group during the pandemic.

It’s not so good news for passengers, who will be expected to pony up to keep the returns flowing. And by quite a bit. Fares rose by 24 per cent during the summer. Further rises are coming. The cost of flying is likely to remain elevated for years to come.

Ryanair cited engine issues threatening to “substantially curtail competitor and lessor capacity” between 2024 and 2026 along with a “large backlog” of aircraft deliveries which would affect the situation in Europe for “the next three to four years”.

Fewer airlines flying fewer planes coupled with the continued recovery in demand means higher fares and more profits for the likes of Ryanair. It also has ambitious growth plans on the table and seems set fair to capitalise even in the midst of an uncertain international situation and the ongoing concerns about the price of fuel, which continue to dog the sector and spoil the projections of finance directors.

True, this is not the only airline to have posted good results of late. IAG, which owns British Airways among others, easyJet and Air France-KLM have all cheered those with an appetite for investing in a sector which requires a very strong stomach and the ability to take a financial battering or three.

Crisis is never far away from the air travel industry, as history shows us. The steady stream of post-Covid bankruptcies tells its own story. The next unholy mess may be just around the corner. However, what we also know is that if there is one airline capable of weathering almost any storm it is Ryanair. O’Leary is bold, brash and occasionally insufferable. But he knows how to make money in an industry that few leave with their reputations enhanced.