Ryanair Predicts a Return to Profitability With a Cautious Undertone

Ryanair remains optimistic about the return of passengers to its route network but strikes a tone of caution as it projects a modest return to profitability for financial 2023. The airline failed to provide specific guidance given the fragile recovery outlook characterized by rising inflation, threat of a recession, the war in Ukraine and potential coronavirus flare-ups. The group also cautioned that yields remain below prepandemic levels despite a strong booking outlook for the European summer season ahead. Ryanair is taking a load factor active/yield passive approach as it lures customers back with lower fares. Capacity over summer is expected to be 15% higher than in 2019 with load factors reaching 90%, while guiding for 165 million passengers for the full year, compared with 150 million travelers prepandemic. These targets require airports to fix existing staff shortages before the summer period. We believe shares are trading at an attractive discount to our EUR 18.20 fair value estimate. The group has a proven low-cost model and a strong balance sheet to take advantage of potential weaknesses among peers and gain market share.