Ryanair boss: Last-minute flights will ‘undoubtedly’ cost more

Passengers booking last-minute flights will “undoubtedly” pay significantly more in the coming months according to Michael O’Leary of Ryanair, which posted a surge in revenues as customer numbers more than doubled during the six months to September 30.

Playing up the company’s green credentials as COP26 got into full swing in Glasgow, the Irish low-cost carrier hailed rebounding traffic figures that allowed it to cut losses to €48 million (£40.6m) for the first half of its financial year. That was a significant improvement on the loss of €411m (£347.8m) in 2020, but analysts said failure to return to profitability despite “good cost control” meant the pandemic recovery could take longer than expected.

Ryanair also said that it may drop its listing on the London Stock Exchange (LSE) following significant falls in trading volumes post-Brexit.

Speaking on the BBC’s 5 Live Breakfast programme, Mr O’Leary hailed the “dramatic recovery” in passenger numbers from eight million to 31 million between the first and second quarters. He added that scenes of “full airports, full flights” during the October mid-term school break are likely to be repeated at Christmas.

“The forward bookings for Christmas are very strong,” he said. “I think people are determined to get together, to reunite with friends and family after they were locked up for 18 months with Covid.”

READ MORE: Ryanair increases passenger growth forecast

He added: “We have lower costs thanks to Covid and we are passing those on in the form of lower fares and we are seeing this stimulate traffic recovery.”

Pressed on the issue of pricing, Mr O’Leary conceded that prices were likely to increase in these periods of peak demand and will “undoubtedly” be higher for those who book last-minute.

“One of the long-term effects of…Covid on the European airline industry as a whole is that so many airlines have disappeared,” he said. “Flybe have gone bust, Thomas Cook have gone bust – a lot of capacity has been taken out of the system.”

Revenues rose by 83% to €2.15 billion (£1.82bn) as passenger volumes during the first half reached 39.1 million, up from 17.1 million in the same period a year earlier but still less than half of pre-pandemic levels. As load factors – the number of bums on available seats – climb from the latest average reading of 79%, carbon emissions per passenger kilometre are expected to fall.

The airline took delivery of its first “Gamechanger” B737 aircraft in June, which carries 4% more passengers but burns 16% less fuel. It plans to have more than 65 of these airplanes in service for the peak summer 2022 season.

READ MORE: Passengers return to the skies but profits still likely to elude Ryanair

Overall, Ryanair wants to grow its traffic by 50% within the next five years to 225 million people annually.

Despite this bullish longer-term outlook, Ryanair said losses for the full fiscal year will likely be between €100m and €200m. Pricing through most of the winter will be “challenging” as “stimulation” will be required to keep traffic volumes up.

This news rattled Ryanair’s share price in yesterday’s trading, with Hargreaves Lansdown equity analyst Nicholas Hyett saying the company’s eventual bill from Covid “could yet be even higher than feared”.

“However, there are some signs that Ryanair will emerge from the pandemic stronger than it went in,” he added.

“New, more efficient planes have the potential to boost Ryanair’s competitive edge on prices in the post-pandemic world – and with carbon taxes likely to increase in the coming years that could be crucial. Meanwhile, new routes and fierce negotiations with airports could further reduce the group’s cost base for years while also boosting its potential market.”

With its primarily listing in Dublin, trading volumes in Ryanair shares on the LSE have tumbled after British shareholders’ rights were restricted by a prohibition on non-EU nationals buying its shares. This ensures Ryanair remains majority EU-owned with full licensing and flying rights in the European Union.

The airline is therefore “considering the merits” of its listing in London.

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