Ryanair goes green and kicks off airline price war

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YANAIR today positioned itself as a “green” airline as it pledged to ramp up its flight numbers and kicked off a price war with rivals such as BA.

The cut price airline made a loss of e96 million (£80 million) for the three months to December. While that was far better than the e321 million deficit for the same period a year ago, it was still worse than the company had hoped.

It blamed “media hysteria” over Omicron for passenger numbers falling below the 11 million it had expected last month. Instead just 9.5 million flew with the Irish airline famed for its garish marketing and the outspoken views of CEO Michael O’Leary.

His response today was forthright.

Ryanair has bet its future on new, bigger planes said to transport more people using less fuel.

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O’Leary said: “Every passenger who switches to Ryanair from legacy airlines cuts their CO₂ emissions by up to 50% per flight.  This growth will be delivered on a fleet of new B737 “Gamechanger” aircraft, which offer 4% more seats, but burn 16% less fuel and reduce noise emissions by 40%.”

While the company warned of a “hugely uncertain” financial future, it set out plans to run more flights this summer than ever before. There will be “significant price stimulation at lower prices” to attract customers.

That’s a clear signal of a price war – good news for consumers looking to go on foreign holidays after two years mostly at home. But potentially bad news for shareholders in airlines.

Ryanair plans to have 225 million passengers a year by 2026, up from a previous prediction of 200 million. It had 149 million a year prior to Covid.

O’Leary warned that this all depends on the virus and government reactions to it.

He said: “This outturn is hugely sensitive to any further positive or negative Covid news flow and so we would caution all shareholders to expect further Covid disruptions before we here in Europe and the rest of the world can finally declare that the Covid crisis is behind us.”

Last week Easyjet said holiday bookings are soaring as travel curbs ease. CEO Johan Lundgren said pent up demand would lead to “a strong summer ahead”.

Easyjet also said it would offer more flights to Euro beach destinations than ever before to cater for Brits desperate for a foreign break. Wizz Air has bought up new slots at Gatwick.

Analysts expect Ryanair to make a loss this year of perhaps e350 million overall, before there is a strong bounceback next year to profits of e1.3 billion (£1 billion).

Davy analysts Stephen Furlong and Ross Harvey says the company’s low costs will “show favourably, if not dramatically” this summer, leaving Ryanair “poised for its next phase of growth”.