Business Context and Reporting Period
Ryanair Holdings plc filed its Form 20-F for the fiscal year ended March 31, 2022, prepared under IFRS. The supplied metadata refers to “2021 Q4,” but the filing is an annual report for fiscal 2022 rather than a quarterly filing. Ryanair operates a low-fare, short-haul airline group across Europe and North Africa through Ryanair DAC, Malta Air, Buzz, Lauda and Ryanair U.K.
Fiscal 2022 reflected a partial recovery from the COVID-19 pandemic, although travel restrictions, the Omicron variant and Russia’s invasion of Ukraine continued to affect demand and operations.
Key Financial and Operating Metrics
| Metric | Fiscal 2022 | Fiscal 2021 |
|---|---|---|
| Total operating revenue | €4,800.9 million | €1,635.8 million |
| Operating loss | €339.6 million | €839.4 million |
| Loss before tax | €429.8 million | €1,108.7 million |
| Loss after tax | €240.8 million | €1,015.1 million |
| Operating margin | (7%) | (51%) |
| Basic loss per share | €0.2130 | €0.9142 |
| Net cash from operating activities | €1,940.5 million | €2,448.0 million outflow |
| Gross cash and liquid resources | €3,625.8 million | €3,150.3 million |
| Total borrowings, including leases | €5,077.4 million | €5,426.8 million |
| Net debt | €1,451.6 million | €2,276.5 million |
| Shareholders’ equity | €5,545.3 million | €4,646.6 million |
- Booked passengers increased 253% to approximately 97 million, from approximately 28 million.
- Passenger load factor increased to 82%, from 71%; the break-even load factor improved to 88%, from 108%.
- Scheduled revenue increased 156% to €2,652.5 million, while ancillary revenue increased 258% to €2,148.4 million. Ancillary revenue represented approximately 45% of total revenue.
- Average booked passenger fare declined 27% to approximately €27, while ancillary revenue per booked passenger increased to €22.13 from €21.80.
- Fuel and oil expense increased to €1,699.4 million and represented approximately 33% of operating expenses, compared with approximately 22% in fiscal 2021.
- Capital expenditure was €1,181.6 million, principally related to aircraft deliveries and aircraft-related assets.
- The Group operated 500 aircraft at March 31, 2022, including 61 Boeing 737-8200 aircraft, and had 19,116 employees at period end.
Material Changes Versus the Prior Comparable Period
- Revenue and traffic recovered substantially as European governments eased COVID-19 restrictions, but the Group remained loss-making because fares were heavily discounted to stimulate demand and fuel prices increased.
- Total operating expenses rose 108% to €5,140.5 million, substantially less than the 253% increase in traffic. Operating expenses declined from 151% to 107% of revenue.
- Staff costs increased 46% to €690.1 million as flight activity increased and temporary pay cuts began to be restored. Payroll support received under government schemes was approximately €82 million, compared with €84 million in fiscal 2021.
- Finance expense decreased to €91.4 million from €297.1 million, primarily because fiscal 2021 included significant hedge ineffectiveness charges.
- Operating cash flow recovered from a €2,448.0 million outflow to a €1,940.5 million inflow, supported by increased bookings and operating activity.
- Gross cash increased by €475.5 million despite €1,181.6 million of capital expenditure and debt repayments. Debt declined primarily because the Group repaid an €850 million Eurobond and the £600 million U.K. COVID Corporate Financing Facility, partly offset by issuing a €1.2 billion Eurobond at a 0.875% coupon.
- Other comprehensive income included a €1,084.1 million increase in the cash-flow hedge reserve, contributing to total comprehensive income of €843.3 million despite the reported net loss.
Guidance, Outlook, Risks and Unusual Items
Management’s fiscal 2023 base case assumed approximately 115% of pre-COVID summer capacity and traffic of approximately 165 million passengers. The filing states that this outlook was subject to substantial uncertainty and that downside scenarios included lower yields, additional aircraft groundings, adverse fuel prices and unfavorable foreign exchange movements. The filing does not provide a clear formal earnings or profit forecast.
- At June 30, 2022, cash, restricted cash and short-term financial assets totaled €4.64 billion and net debt had declined to approximately €0.4 billion. Management stated that available liquidity and financing sources were sufficient for projected requirements over at least the following 12 months.
- Ryanair planned to receive 149 additional Boeing 737-8200 aircraft during fiscal years 2023 through 2025, with total firm orders of 210 aircraft and contractual purchase obligations of approximately €5.83 billion.
- Key risks include renewed pandemic restrictions, weaker discretionary travel demand, fuel and carbon prices, inflation, labor disruptions, foreign exchange volatility, supply-chain constraints, Boeing delivery delays, airport charges and access, competition, cyberattacks, safety and regulatory requirements, Brexit-related issues and the war in Ukraine.
- Fuel hedging covered approximately 65% of estimated fiscal 2023 requirements at March 31, 2022; a separate June 30 disclosure stated approximately 80% coverage. The filing also reported approximately €1.04 billion of unrealized fuel and related derivative gains at March 31, 2022.
- Environmental taxes remitted increased to approximately €255 million from €54 million. Proposed EU measures, including emissions allowance reforms, sustainable aviation fuel mandates and possible fuel taxation, could increase costs.
- Ryanair faced ongoing European Commission and court proceedings concerning alleged unlawful state aid at certain airports, with approximately €32 million of alleged aid repayment orders described in the risk disclosures, as well as screenscraper litigation and a U.S. securities class action concerning historical employment and unionization disclosures.
- The Company completed no share repurchases and paid no shareholder returns during fiscal 2022. It maintained BBB stable ratings from both S&P and Fitch.
- The audited financial statements received an unqualified opinion, and management and KPMG concluded that internal control over financial reporting was effective as of March 31, 2022.
Important Facts for Investors to Verify
- Whether passenger volumes, fares and load factors achieved the fiscal 2023 base-case assumptions, particularly the 165 million passenger target.
- The effect of fuel, carbon and foreign exchange costs after hedging, including the level and timing of future hedge coverage.
- Aircraft delivery schedules, Boeing-related commitments, capital expenditure and the financing required for the remaining 149 firm aircraft.
- Liquidity after seasonal working-capital movements, debt maturities and aircraft purchases; note that €1,224.5 million of debt was classified as current at March 31, 2022.
- The outcome and potential repayment, operational or strategic consequences of airport state-aid proceedings and other litigation.
- The financial impact of labor agreement changes, restoration of pay cuts, staffing availability and possible strikes or operational disruptions.
- Whether the recovery in ancillary revenue and margins can continue while the Group maintains its low-fare strategy amid inflation, competition and higher airport and environmental costs.