Ryanair has expressed disappointment in its business performance, resulting in a 17% decline in its stock following the release of a weaker-than-expected quarterly earnings report. Revenue remained unchanged at €3.6 billion ($4 billion) compared to 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 requires significant effort to attract them.
O’Leary remarked during the earnings call that traffic has increased by 10%, reaching 55 million passengers, but this growth comes at a cost. The airline is compelled to continuously lower fares and stimulate bookings, which fell short of expectations, especially heading into the peak travel months of July, August, and September.
In addition to lower demand, Ryanair is facing rising labor costs and attributed some of its challenges to Boeing’s prolonged delivery delays. Despite managing the fallout from a recent incident involving a 737 Max 9, O’Leary has long pressured Boeing to improve its operations.
He also indicated that customers seem to be feeling more financial strain compared to the early phase of the COVID-19 recovery, citing years of inflation and slowing economic growth in the European Union as contributing factors. O’Leary mentioned that this might lead to a strategic advantage for Ryanair as it plans to reduce its capacity for summer 2025 and anticipates two years without any growth in capacity.
“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 stated. “If consumers are under financial pressure over the next year or 18 months, that might not be the worst position for us.”