Ryanair is expressing disappointment in its recent business performance, and this sentiment echoes among its investors. The Irish budget airline’s stock has plunged by 17% following the release of a weaker-than-expected quarterly earnings report. The company reported a revenue of €3.6 billion ($4 billion), which is essentially the same as last year. However, profits have nearly halved, declining to €336 million. CEO Michael O’Leary mentioned that while more people are flying with Ryanair, the company is facing significant challenges to maintain this customer volume.
In the earnings call, O’Leary noted, “Traffic growth is strong, up 10% to 55 million passengers, but it comes at a cost. We have to continually stimulate fares and bookings, but the performance of close-in fares and bookings has been disappointing and materially weaker than expected, especially during the peak months of July, August, and September.”
Adding to the challenges of lower demand, Ryanair is also contending with higher labor costs and ongoing issues with Boeing’s delivery delays, a recurring problem for O’Leary. Despite standing by the company after a door plug incident on a 737 Max 9, he has called for better performance from the planemaker for years.
Furthermore, O’Leary highlighted that Ryanair’s customers appear to be facing more economic hardship than during the earlier stages of the COVID-19-era recovery. According to Reuters, prolonged inflation and slowing economic growth are impacting people across the European Union. Given this scenario, a smaller fleet might actually work to Ryanair’s advantage.
O’Leary told investors, “We will have less capacity into summer 2025 than originally scheduled due to Boeing’s delivery issues. We are looking at essentially no capacity growth for the next two years. If consumers are going to be under pressure for the next year or 18 months, this might not be the worst position to be in.”