Can Ryanair Maintain the Momentum?

After a strong showing during Christmas, the question is if Ryanair can keep up the momentum through the summer.

Positive Trends, But to Report Net Loss

Of the major European budget airlines, Ryanair is the last to report. Rivals Wizz and EasyJet beat estimates handily and agreed that bookings had shown continued positive trends. Most recently, Ryanair's talkative CEO said he didn't see any signs of a recession in Europe and that bookings so far this year have hit a record high.

The company was also expecting to get more of its pending order of B737-MAX jets earlier than expected. It recently announced it planned to hire a 2K cabin crew for the summer period as part of a 5-year plan to expand the workforce by 6K. The company remains optimistic about this year's developments. However, it expects the final quarter of the fiscal year to report a net loss because Easter is in April this year.

Focus on Cost Outlook and Aircraft Delivery

In the fourth quarter, the company provided preliminary Q3 results and raised its forecast for FY23 net income. Net income for the third quarter was forecast at around €200M. Despite guiding higher income, Ryan air affirmed its traffic outlook, which opens the question of whether it plans to raise rates as demand increases. Fuel hedging might also prove to be a headwind, as the company had to secure supplies last year.

Load factor and passenger numbers are expected to be the new data released with the final Q3 earnings on Monday. Focus is likely on cost outlook and aircraft delivery schedule, with demand already forecasted to be higher. Back in December, the CEO warned that the company might have to cut growth plans if it were short on aircraft. The other factor would be any further commentary on bookings forecasts for the coming months.

Ryanair (ROI) at Golden Extension

Ryanair has pulled off a decent rally from October's low at 10, closing in last year's high at 18.50. Following a reversal in the aftermath of a wedge pattern, ROI accelerated to 13.60 in its first upward leg. The completion of a flag pattern at the 38.2% Fibonacci near 12 later helped the stock extend its gains to the 161.80% Fibonacci at 15.80, where a rejection might be offering another pullback. If prices remain above 13.60, the chances of reaching the top will rise. Otherwise, losing 12 might expose signal digits.

Source: Spreadex

Key Takeaways

Ryanair is the last European budget airline to report, but contrary to Wiz and Easy, it expects to report a net loss in the Q4. Ryanair's CEO remains optimistic, and the company plans to hire a 2k cabin crew for the summer and expand its workforce by 6000 over the next five years. Ryanair has forecasted higher net income for the third quarter and affirmed its traffic outlook. This may mean that the company plans to raise rates as demand increases. Delivery of aircraft and cost outlook are likely to be the main focus points when final Q3 earnings are released on Monday.