Ryanair is expressing disappointment with its recent business performance, and this sentiment is echoed by its investors. The Irish budget airline’s stock plummeted 17% following a weaker-than-expected quarterly earnings report. The company’s revenue remained steady at €3.6 billion ($4 billion) compared to last year, but profits nearly halved to €336 million. CEO Michael O’Leary highlighted that while the airline is attracting more passengers, it is requiring significant effort to do so.
“Traffic growth is strong, up 10% to 55 million passengers, but it’s coming at a cost,” O’Leary stated during the company’s earnings call. He noted that they are constantly needing to stimulate fares and bookings, and the performance of close-in bookings, especially leading into the peak months of July, August, and September, has been disappointing and weaker than expected.
Alongside softer demand, Ryanair is also grappling with increased labor costs and ongoing issues with Boeing’s delivery delays – a persistent grievance for O’Leary. Despite standing by Boeing after a door plug on a 737 Max 9 failed mid-flight this year, he has consistently urged the aircraft manufacturer to improve its performance.
O’Leary also pointed out that their customers seem to be feeling the economic strain more than during the early stages of the COVID-19 economic recovery. Reuters reported that prolonged inflation and sluggish economic growth are beginning to take a toll on people in the European Union. In this context, the necessity to operate fewer aircraft might work in Ryanair’s favor.
“We will have less capacity heading into summer 2025 than we originally planned with our Boeing deliveries, leading to two years of essentially no capacity growth at all,” O’Leary said. “If consumers are going to be under pressure for the next year or 18 months, that might not be the worst scenario.”