Ryanair Holdings plc (RYAAY) Q3 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
Ryanair's earnings call presents a positive outlook. Despite a Q3 PAT decline, strong traffic and fare recovery, coupled with strategic fuel hedging, indicate robust financial health. The balance sheet remains strong with significant liquidity and a BBB+ credit rating. The ongoing buyback and dividend payments enhance shareholder returns. Although environmental taxes are rising, Ryanair's growth strategy in low-tax regions and fleet expansion plans support future growth. Analysts' questions reveal confidence in management's handling of challenges. Overall, the positive elements, especially traffic growth and fare recovery, outweigh concerns, suggesting a positive stock price movement.
Key Financial Performance
Q3 profit after tax EUR 115 million, pre-exceptional. Down 22% year-over-year primarily due to the absence of Boeing delivery compensation tanks and catching up on their order book.
Traffic growth 6% increase to 47.5 million passengers. Reasons include earlier-than-expected Boeing deliveries and strong demand.
Revenue per passenger Up 3%. Reasons include strong midterm break in October and close-in bookings for Christmas and New Year.
Unit costs Flat year-over-year. Reasons include strong cost control and effective fuel hedging.
Revenue Up 9% to EUR 3.21 billion. Reasons include increased traffic and higher fares.
Profit after tax (post-exceptional) EUR 30 million. Impacted by a EUR 85 million exceptional charge related to the Italian AGCM fine provision.
Balance sheet liquidity EUR 2.4 billion gross cash and EUR 1 billion net cash. Strong liquidity position.
Shareholder return 153% total shareholder return over the past 3 years. Reasons include disciplined capital allocation and strong financial performance.
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Operating Highlights
Gamechanger Aircraft Deliveries: Ryanair has received 206 Gamechanger aircraft in its fleet, with 4 more expected by February. These aircraft are fuel-efficient, with 20% more seats and 20% less fuel consumption, supporting profitable growth.
MAX 10 Aircraft: Ryanair expects the first 15 MAX 10 aircraft deliveries in Spring 2027, which will enable a decade of growth to 300 million passengers by FY '34.
New Bases and Routes: Ryanair announced 3 new bases in Rabat (Morocco), Tirana (Albania), and Trapani (Italy), along with 106 new routes for Summer 2026.
Market Reallocation: Capacity is being shifted to regions with lower aviation taxes, such as Albania, regional Italy, Morocco, Slovakia, and Sweden, while reducing operations in high-cost markets like Austria, Belgium, Germany, and regional Spain.
Fuel Hedging: 80% of fuel for FY '27 is hedged at $67 per barrel, resulting in a 10% cost saving.
Traffic Growth: Traffic is expected to grow 4% to 208 million passengers in FY '26 and further to 216 million passengers in FY '27.
Shareholder Returns: Ryanair has delivered a total shareholder return of 153% over the past 3 years, supported by disciplined capital allocation and a strong balance sheet.
Debt-Free Position: Ryanair plans to repay its final EUR 1.2 billion bond in May 2026, effectively making the company debt-free.
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Risk or Challenges
Italian AGCM Fine: Ryanair faces a EUR 256 million fine from the Italian AGCM Competition Authority for its direct distribution policy in Italy. The company believes the fine is baseless and expects it to be overturned on appeal, but it has still provisioned 33% of the fine in its accounts.
European ATC Strikes and Mismanagement: Repeated air traffic control (ATC) strikes and mismanagement in Europe pose risks to Ryanair's operations, potentially impacting schedules and profitability.
Conflict Escalation in Ukraine or the Middle East: Potential escalation of conflicts in Ukraine or the Middle East could adversely affect Ryanair's operations and financial performance.
Macroeconomic Shocks: Adverse macroeconomic developments could impact Ryanair's financial performance and strategic objectives.
Environmental Costs and ATC Charges: Rising environmental costs and air traffic control charges in Europe are expected to increase operational expenses.
Boeing Delivery Delays: Delays in Boeing aircraft deliveries have previously impacted Ryanair's operations, and while improvements are expected, any future delays could pose risks.
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Guidance & Outlook
Traffic Growth: FY '26 traffic is expected to grow 4% to 208 million passengers due to strong demand and earlier-than-expected Boeing deliveries. FY '27 traffic is projected to grow 4% to 216 million passengers.
Revenue and Fares: Full year fares are expected to exceed the previous guidance of 7% growth, potentially reaching 8% or 9%. Revenue growth is supported by strong demand and fare increases.
Profit Guidance: Full year profit after tax pre-exceptionals is cautiously guided in the range of EUR 2.13 billion to EUR 2.23 billion, subject to external risks such as geopolitical conflicts and macroeconomic shocks.
Fuel Hedging: 80% of FY '27 jet fuel requirements are hedged at $67 per barrel, delivering a 10% cost saving compared to the current year.
Fleet Expansion: The fleet will include 210 Gamechanger aircraft by February 2026. The first 15 MAX 10 aircraft are expected in Spring 2027, supporting growth to 300 million passengers by FY '34.
Market Strategy: Capacity is being allocated to regions with lower aviation taxes and incentives, such as Albania, Morocco, and Sweden, while reducing operations in high-cost markets like Austria and Germany.
Long-Term Growth: Ryanair plans to grow traffic to 300 million passengers by FY '34, supported by the delivery of 300 MAX 10 aircraft, which are 20% more fuel-efficient and have 20% more seating capacity.
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Shareholder Return Plan
Interim Dividend: An interim dividend of just over $0.19 per share is payable in late February.
Share Buyback Program: 46% of the EUR 750 million buyback has been completed by the end of the third quarter.
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Key Q&A
Q:What were the key drivers for Ryanair's Q3 PAT of EUR 115 million, down 22%?
A:The key drivers included strong traffic up 6% to 47.5 million passengers with 4% higher fares, strong midterms in October, and strong close-in bookings for Christmas and New Year. Ancillaries rose 7%, and unit costs were flat pre-exceptional charges. However, there was no Boeing delayed compensation this quarter, unlike the prior year.
Q:Will Ryanair provide for the balance of the Italian AGCM fine in Q4?
A:No, Ryanair has provided 33% of the fine and does not expect to make further provisions. They are confident the ruling will be overturned on appeal, supported by a Milan Court of Appeal precedent.
Q:What is Ryanair's hedging position?
A:Ryanair is 84% hedged at $76 a barrel for the current quarter and 80% hedged at $67 a barrel for next year, representing a 10% saving. They are also locked in at EUR 1.15 for euro-dollar exposure for next year.
Q:How is Q4 trading?
A:Demand is good, with traffic expected to rise slightly faster than previously expected, reaching 208 million passengers for the full year. Pricing in Q4 is modestly ahead of the prior year, but the final outcome depends on no disruptions in February and March.
Q:Can you provide any color on Summer trading and FY '27 costs?
A:It is too early to provide details as the budget is still being finalized. However, Ryanair is targeting traffic of 216 million for next year, up from the previously guided 215 million, with benefits from fuel hedges expected.
Q:What are the main callouts of Ryanair's strong balance sheet?
A:Ryanair has a BBB+ credit rating, an unencumbered fleet of almost 620 aircraft, EUR 2.4 billion gross cash, and almost EUR 1 billion net cash. This positions them well to repay bond debt in May from internal resources.
Q:What is the FY '26 and FY '27 CapEx guidance?
A:FY '26 CapEx is expected to be close to EUR 2 billion, down from the previously guided EUR 2.2 billion due to timing issues. FY '27 CapEx is expected to be similar, close to EUR 2 billion.
Q:How will Ryanair finance the MAX 10s?
A:Ryanair will primarily use internally generated cash but will also consider bond or bank markets when opportunistic or low-cost.
Q:How is the EUR 750 million buyback progressing?
A:The buyback is progressing well, with 46% completed by the end of December, equating to 13.1 million shares bought back at an average price of EUR 26 per share, totaling EUR 340 million.
Q:When is the next dividend payable?
A:An interim dividend of just over EUR 0.19 per share is payable by the end of February.
Q:Has Ryanair shifted focus from investing in growth to shareholder returns?
A:No, Ryanair continues to focus on growth, targeting 300 MAX 10s in the fleet and 300 million passengers by FY '34. They maintain a strong investment-grade balance sheet and will return surplus cash to shareholders when available.
Q:When will Ryanair receive the final Gamechangers?
A:The final 4 Gamechangers will be delivered in February, ahead of the Summer '26 schedule launch.
Q:What is the latest update on MAX 10 certification?
A:Boeing expects MAX 10 certification in Summer 2026, likely in Q3 (July-September). Ryanair expects to take the first 15 MAX 10s in Spring 2027.
Q:What are Ryanair's views on European short-haul capacity?
A:European short-haul capacity will remain constrained until at least 2030 due to delivery delays from Boeing and Airbus, engine repair issues, and industry consolidation.
Q:Where is Ryanair focused on growing?
A:Ryanair is focused on regions reducing aviation taxes and stimulating growth, such as Albania, Sicily, and Morocco, while pulling capacity from markets increasing taxes like Austria, Belgium, and Germany.
Q:What is the latest update on Ryanair's engine shop project?
A:Ryanair expects to announce the first of two engine shop sites by March or April, with the first shop operational by late 2028 or early 2029. The second shop will open in the early 2030s.
Q:What is Ryanair's FY '26 outlook?
A:Ryanair expects 208 million passengers (4% growth), fares recovering by 7%-9%, modest unit cost inflation, and profit after tax (pre-exceptional) between EUR 2.13 billion and EUR 2.23 billion. They also anticipate 4% traffic growth next year to 216 million passengers.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on Summer trading and FY '27 costs, stating it was too early as the budget is still being finalized.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AGCM fine
Albania
Boeing MAX
CEO Executive
Christmas
Executive Director
FY barrel
Gamechangers
MAX certification
MAX order
Milan
Morocco
Stoxx
TSR
absence
account
advantage traffic
aviation tax
base route
certification place
churn
consumer
decade passenger
distribution
excess
fine appeal
grade rating
investment grade
lawyer
model
order book
place Summer
provision
quartile
ruling
shareholder return
term outlook
traffic passenger
RYAAY Transcript
Ryanair Holdings plc (RYAAY) Q3 2026 Earnings Call Transcript
Positive1-26
The earnings call highlights positive traffic growth projections, fare recovery, and strategic fleet expansion. Despite some uncertainties in cost guidance and potential industrial action, the strong fare increase, hedged fuel costs, and focus on profitable markets indicate a positive outlook. The Q&A section supports this with positive sentiment on fare guidance and strategic growth in Central and Eastern Europe, outweighing concerns about engine costs and competition fines. Overall, the combination of strategic growth plans and financial performance suggests a positive stock price movement in the short term.
Ryanair Holdings plc (RYAAY) Q3 2026 Earnings Call Transcript
Positive1-26
Ryanair's earnings call presents a positive outlook. Despite a Q3 PAT decline, strong traffic and fare recovery, coupled with strategic fuel hedging, indicate robust financial health. The balance sheet remains strong with significant liquidity and a BBB+ credit rating. The ongoing buyback and dividend payments enhance shareholder returns. Although environmental taxes are rising, Ryanair's growth strategy in low-tax regions and fleet expansion plans support future growth. Analysts' questions reveal confidence in management's handling of challenges. Overall, the positive elements, especially traffic growth and fare recovery, outweigh concerns, suggesting a positive stock price movement.
Ryanair Holdings plc (RYAAY) Q2 2026 Earnings Call Transcript
Positive11-3
The earnings call reveals strong financial performance with a 20% increase in profits, controlled costs, and effective fuel hedging. Traffic and fare recovery are progressing, and the company is on track to becoming debt-free. The Q&A session indicates confidence in fare recovery, growth plans, and profit per passenger increase. Despite some uncertainties, like EU ETS costs and Boeing deliveries, the overall sentiment is positive, driven by strategic growth and financial health. This suggests a likely stock price increase of 2% to 8%.
Ryanair Holdings plc (RYAAY) Q1 2026 Earnings Call Transcript
Positive7-21
The earnings call and Q&A reveal strong financial performance, strategic positioning, and shareholder returns. Despite uncertainties like tariffs and ATC strikes, Ryanair's hedging strategies, fleet expansion, and cost management are positive indicators. The commitment to shareholder returns through buybacks and dividends further boosts sentiment. Although there are some concerns about pricing fragility and delivery timelines, the overall outlook is optimistic, with modest fare increases and traffic growth expected.
RYAAY Report
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