Ryanair is expressing disappointment in its business performance, a sentiment echoed by investors. The Irish budget airline’s stock has dropped by 17% following a weaker-than-expected quarterly earnings report. The company’s revenue remained flat at €3.6 billion ($4 billion) compared to last year, but profits were nearly halved to €336 million. CEO Michael O’Leary mentioned that while the airline is attracting more passengers, it is requiring significant effort to do so.
“We’re seeing a strong traffic growth, with a 10% increase to 55 million passengers, but this comes at a cost,” O’Leary stated during the company’s earnings call. “We’ve had to repeatedly stimulate fares and bookings, and the close-in fares and performance have been disappointing and weaker than expected, particularly leading into the peak months of July, August, and September.”
Apart from softer demand, Ryanair is also facing higher labor costs and has partly blamed Boeing for delivery delays, an issue that has long been a sore spot for O’Leary. Despite supporting Boeing after a door plug on a 737 Max 9 blew out mid-flight this year, O’Leary has been urging the manufacturer to improve its delivery schedule for years.
Additionally, O’Leary informed investors that Ryanair’s customers appear to be facing more financial challenges compared to the early recovery phase of the COVID-19 pandemic. According to Reuters, prolonged inflation and sluggish economic growth are beginning to take a toll on consumers in the European Union. Under these circumstances, operating fewer jetliners might benefit Ryanair.
“We will have less capacity going into summer 2025 than originally planned due to Boeing’s delivery issues, and subsequently, we’re looking at two years with essentially no capacity growth,” O’Leary said. “If consumer pressure persists over the next year or 18 months, this position might not be the worst place to be.”