Ryanair’s profits ‘will rise’ as recession forces passengers to opt for cheaper fares
Low-cost airline Ryanair has raised its profit guidance for its full year 2023 to between €1.32bn (£1.16bn) and €1.42bn (£1.25bn).
This is a 25 per cent boost on its initial range of between €1bn and €1.20bn.
Analysts at Liberum raised Ryanair’s forecast after a better than expected third quarter; Ryanair carried 11.5 million passengers in December, 21 per cent up on last year’s levels. Numbers were also up on November’s 11.2 million travellers.
Load factor – a key metric used to calculate how full planes are – was at 92 per cent of 2019 levels.
“We increase our target price to €16 from €13 and upgrade our recommendation to Buy from Hold,” Liberum said in a note.
Liberum was not the only one to notice Ryanair’s performance, as AJ Bell financial analyst Danni Hewson said yesterday the low-cost airline’s passenger performance had “perked up investors ears.”
“After a torrid few years for the travel sector, planes are finally filling up to profitable levels,” Hewson wrote in a note on Wednesday.
“And despite niggling concerns about how the cost-of-living crisis might impact holiday decisions this year, Wizz Air and EasyJet have soared to the top of the FTSE 250 gainers today with Jet2 and IAG also enjoying those clear blue skies.”
Ryanair’s chief executive Michael O’Leary had previously said that the company would grow in a recession, as more people shy away from the higher fares put forward by competitors.
“People in a recession will get much more price sensitive,” O’Leary told journalists in late August.
“We will see a much larger number of people trading down from British Airways and Easyjet.”