Why European Airline Ryanair's Shares Are Seeing Blue Skies Today

Ryanair Holdings PLC RYAAY shares are trading higher by around 10% after it reported H1 FY24 revenue growth of 30% Y/Y to €8.58 billion.

Scheduled revenues were up 37% Y/Y to €6.1 billion, led by traffic growth of 11% Y/Y to 105.4 million customers and a 24% Y/Y uptick in average fares to €58. Also, Ancillary revenue rose 14% Y/Y to €2.5 billion.

Net profit escalated to €2.18 billion, a significant increase from €1.37 billion a year ago, benefiting from record summer traffic. EPS rose 72% Y/Y to €1.91 in the quarter.

Operating costs increased 24% Y/Y to €6.2 billion on higher fuel costs (+29% Y/Y to €2.8 billion), staff costs, and ATC fees.

Net cash generated by operating activities totaled €1.64 billion. As of September 30, 2023, net cash stood at €844 million.

As of September 30, the total fleet stood at 563 aircraft. The company's fuel needs are around 85%, hedged at approximately $89bbl for FY24, and FY25 hedging increased to over 50% at around $79bbl, which is expected to deliver savings of about €300 million on the fuel already hedged for FY25.

Dividend: The Board disclosed a maiden ordinary dividend of €400 million (€0.35 per share) through an interim and final dividend of €200 million each, payable in February 2024 and September 2024, respectively.

FY24 Outlook: Ryanair projects Q3 average fares to be ahead of the prior year by a mid-teens percentage on constrained EU capacity this winter (Eurocontrol expects EU capacity to recover to only 94% of pre-COVID) and the impact of P&W engine repairs on competitor fleets.

For Q4, the company says it had limited visibility with an expected impact of the partial unwind of free ETS carbon credits (from January 2024).

Consequently, the company now projects FY24 PAT to be within €1.85 billion to €2.05 billion, assuming modest losses over the H2 winter period.

Ryanair reiterated the outlook for traffic to be around 183.5 million (+9% Y/Y) in FY24, with the final figure depending on Boeing Co BA meeting their delivery commitments between now and year-end. 

Related: Ryanair Trims Autumn Winter Schedule Due To Boeing Delivery Delays

The company continues to project around a €2 increase in ex-fuel unit costs in FY24. 

Ryanair expects the Gamechanger and MAX-10 orderbooks to deliver annual traffic of 300 million by FY34.

Also Read: Italy Launches Probe Against Ryanair's Market Practices: Report

Price Action: RYAAY shares are up 9.24% at $103.00 premarket on the last check Monday.

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