Ryanair is facing disappointment in its business performance, reflected in a 17% drop in its stock following the release of a weaker-than-expected quarterly earnings report. The Irish budget airline reported revenue of €3.6 billion ($4 billion), essentially unchanged from the previous year. However, profits nearly halved to €336 million. CEO Michael O’Leary noted that while more passengers are flying with the airline, it is requiring significant effort to achieve this growth.
During the earnings call, O’Leary highlighted that traffic growth is strong, up 10% to 55 million passengers, but emphasized that it comes at a cost. He mentioned that the airline is having to frequently stimulate fares and bookings, and close-in bookings have been particularly disappointing as the peak months of July, August, and September approach.
In addition to decreased demand, the airline is grappling with rising labor costs and has expressed frustration over delayed deliveries from Boeing, a longstanding issue for O’Leary. While he has supported the company following a mid-flight incident earlier this year involving a 737 Max 9, he has also urged Boeing to improve its performance.
O’Leary informed investors that consumers may be struggling more than during the initial recovery phase from the COVID-19 pandemic. Reports suggest that years of inflation and stagnant economic growth in the European Union are affecting people’s spending power. In light of this, he suggested that operating fewer aircraft might benefit Ryanair.
He stated that the airline would have less capacity in summer 2025 than initially planned due to Boeing’s delays, leading to two years of essentially no growth in capacity. O’Leary remarked that if consumer pressure continues over the next year to 18 months, this situation could prove advantageous for Ryanair.