Low-cost airlines play a major role in Europe. Their success can be proven by the growing number of passengers they carry. Ultra-low-cost carrier Ryanair has soared to become one of Europe’s biggest airlines by number of passengers. Fellow LCCs EasyJet and Norwegian are also major players. In 2017, Ryanair carried 120 million passengers. EasyJet flew 80 million passengers. And Norwegian transported 30 million travelers. Despite some stumbles, all three LCCs are prepared for continued growth, and possibly considering consolidation.

Ryanair: enjoying cost leadership

On July 21, 2017, Ryanair released its annual financial report, showing the airline’s strong performance in 2017.  The results show that operating revenue grew by 2 percent, while profit after tax increased by 6 percent to €1.316 billion.

Traffic grew by 13 percent to 120 million passengers as load factor rose to 94 percent. The average fares fell by 13 percent to €41. The airline also drove down costs with a five percent (ex-fuel) unit cost reduction in 2017.

The carrier launched 206 new routes and opened 10 new bases. It also expanded its fleet by 12 percent with the deliveries of 52 new B737-800. Ryanair announced it is going to take delivery of 210 B737-MAX-200 aircraft from April 2019.

The airline states that these results are “a testament to the strength of Ryanair’s model” and that the carrier “can grow at both primary airports and new destinations while widening the cost gap between us [Ryanair] and other European airlines.”

In a Q3 financial report, released on February 5, 2018, Ryanair recorded a 12 percent rise in profit to €106 million as average fares fell by four percent to €32 per customer. Traffic grew by six percent to 30.4 million with load factors up by one percent at 96 percent. Unit costs fell by one percent (ex-fuel unit costs rose by three percent).

In Q3 Ryanair also took delivery of nine new B737-800s and said it now expects 2018 full year traffic growth of eight percent to 130 million. The airline maintains its full year guidance in a range of €1.40 billion to €1.45 billion.

As for early indications for 2019 fiscal year, Ryanair states that its traffic will grow by six percent to 138 million. The carrier should provide a more detailed FY2019 guidance during its full-year results and investor roadshow in May 2018.



Ryanair Boeing 737-800 (Photo by Adrian Pingstone)

 

EasyJet: from strength to strength

EasyJet presented its financial results for the year ending on September 30, 2017, stating a record number of 80.2 million passengers, up 9.7 percent year on year, with record load factor at 92.6 percent, compared to the 91.6 percent in 2016. Capacity grew by 8.5 percent to over 86.7 million seats.

The carrier reported total revenue of £5.047 million (€5.730 million), up 8.1 percent with revenue per seat broadly flat year on year at £58.23 (€66.11), reflecting a currency benefit, strong ancillary revenue and increased load factors, alleviating ticket pricing pressures.

Headline cost per seat excluding fuel at constant currency increased by 0.9 percent to £38.69 (€43.93), in line with guidance, with the investment in resilience representing an increase of 0.7 percent of that increase, as well as the impact of continued high levels of disruption. The financial year 2017 headline cost per seat, excluding fuel and disruption, at constant currency was marginally lower than 2015 financial year.

The carrier also reported a headline profit before tax of £408 million (€463 million), despite an adverse headline currency impact of £101 million (€115 million). Reported profit before tax of £385 million (€437 million), after non-headline costs of £23 million (€26 million) mainly relating to sale and leaseback charges.