Ryanair is facing disappointment in its business performance, and investors are reflecting that sentiment. The Irish budget airline’s stock has dropped by 17% following a weaker-than-expected quarterly earnings report. While revenue remained stable at €3.6 billion ($4 billion), profits were nearly halved to €336 million. CEO Michael O’Leary mentioned that while more people are flying on Ryanair, the effort to attract these passengers has been substantial.
“Traffic growth is strong, up 10% to 55 million [passengers], but it’s only strong at a price,” O’Leary said during the company’s earnings call. “We have to repeatedly stimulate fares and bookings. The close-in fares and performance, and the close-in bookings, have been disappointing and materially weaker than we’ve expected, particularly heading into the peak months of July, August, and September.”
In addition to softer demand, Ryanair is also grappling with higher labor costs and has blamed some of its troubles on Boeing’s delivery delays—a persistent issue for O’Leary. Despite standing by Boeing after a door plug on a 737 Max 9 blew out mid-flight this year, he has urged the manufacturer to improve its performance for years.
O’Leary also informed investors that Ryanair’s customers appear to be struggling more now than during the early recovery phase of the COVID-19 pandemic. Reuters reports that prolonged inflation and slow economic growth are affecting people in the European Union. In light of this, operating fewer jetliners might actually benefit Ryanair.
“We will have less capacity into summer 2025 than we are originally scheduled to have with our Boeing delivery, and then, we’re into two years of essentially no capacity growth at all,” O’Leary said. “And if the consumer is going to be under pressure for the next year or 18 months, that might not be the worst place to be.”