Ryanair Holdings (RYAAY) Q2 2023 Earnings Call Transcript

For the period ending September 30, 2022

November 7, 2022 5:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Welcome to the Ryanair H1 FY '23 Results Conference Call. [Operator Instructions] Just to remind you, this call is being recorded.

Today, I am pleased to present Michael O’Leary. Please begin your meeting.

Michael O’Leary

Okay. Good morning, ladies and gentlemen. You're all very welcome to the Ryanair half year results conference call. I'm in London with a portion of the team; Eddie Wilson is in Dublin with another portion of the team; Neil Sorahan is in New York, all joining us on the call this morning. I'm going to take the results and the MD&A and everything, that is just read. So the -- I think we'll maximize time for the Q&A here. Couple of great themes I would point you to the slide presentation on the website.

I think the 2 key issues coming out of COVID and coming out of the half year is Slide 4 which shows the unit cost, ex-fuel gap widening considerably between us and every other airline in Europe. We went into COVID with a unit cost ex-fuel of €31. We come out of COVID, that number has slipped down to just under €30. Whereas almost all of our EU competitors have emerged out of COVID with significantly higher ex-fuel unit costs rising and that gap is widening. I think that's one of the reasons why we're seeing such a strong recovery in Ryanair. This summer we had -- we were fully staffed into the summer. We operated at 115% to pre-COVID capacity. Fares in the first quarter were under pressure because of the Ukrainian invasion which damaged Easter. But into the second quarter, the September quarter, we've seen traffic growth of 11%, 12%, capacity growth of 15% for the airfares. Average fares were up 14% in the second quarter.

We don't expect that to continue into the winter but we have been quite surprised at the strength of forward bookings into the third quarter. We had a very strong October mid-term. Christmas looks strong, both at volume and at the average fare level and this weekend's bookings were stronger than the previous weekend's bookings which is remarkable, given all of the kind of coverage of recession, inflation, consumer price pressures.

I think we're seeing something at the moment. I don't know how long it continues but we are seeing one -- and I would point you to Slide 10 which is competitors' cutting capacity as Ryanair's growth [ph]. We're going into the second half of the year, the December and March quarter, offering at 110% of pre-COVID capacity. All of our competitors are still running at less than their pre-COVID capacity. The one exception being the smaller Hungarian airline but our experience with them in recent quarters has been that they talk about offering capacity but then they cut frequently and close in, so they actually operate probably only 10%, 15% more than pre-COVID but also much smaller base than us.