Ryanair is expressing disappointment over its recent business performance, leading to a 17% decline in its stock value following the release of a weaker-than-expected quarterly earnings report. The Irish budget airline reported revenue of €3.6 billion ($4 billion), which remained flat compared to the previous year, while profits plummeted nearly 50% to €336 million. CEO Michael O’Leary noted an increase in passenger numbers, stating that the airline is managing to attract more customers, but it comes at a significant effort.
During the earnings call, O’Leary remarked that traffic growth has surged by 10%, reaching 55 million passengers. However, he pointed out that this growth is contingent on pricing, and the airline has had to continuously incentivize fares and bookings. He mentioned that close-in bookings and performance have fallen short of expectations, particularly leading into the peak travel months of July, August, and September.
In addition to facing softer demand, Ryanair is contending with rising labor costs and has criticized Boeing for ongoing delivery delays. Despite recent technical issues with the 737 Max 9, O’Leary has maintained a long-standing expectation for Boeing to improve its operations.
Furthermore, O’Leary has indicated that customers may be feeling the impact of economic challenges more than they did during the initial recovery from the COVID-19 pandemic. Reports suggest that inflation and slow economic growth are beginning to affect consumers in the European Union. Under these circumstances, reducing the number of aircraft in operation could potentially benefit Ryanair.
He stated, “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. If the consumer is going to be under pressure for the next year or 18 months, that might not be the worst place to be.”