Ryanair Faces Turbulent Times: Profit Plummets and Stock Takes a Hit

Ryanair has expressed disappointment in its recent business performance, leading to investor dissatisfaction as well. The Irish low-cost airline’s stock has dropped 17% following the release of a quarterly earnings report that fell short of expectations. The company’s revenue stood at €3.6 billion ($4 billion), which is comparable to the previous year’s figure. However, profits took a significant hit, falling nearly 50% to €336 million. CEO Michael O’Leary indicated that while more passengers are flying with Ryanair, attracting them requires considerable effort.

During the earnings call, O’Leary noted that traffic growth was strong, registering a 10% increase with 55 million passengers, but emphasized that this growth comes at a cost. He mentioned that the company has had to continuously stimulate ticket prices and bookings. Additionally, he expressed disappointment with the performance of close-in bookings, which have been weaker than anticipated as the peak months of July, August, and September approach.

Compounding the challenge of reduced demand, Ryanair is also facing rising labor costs and has attributed part of its difficulties to delays in aircraft deliveries from Boeing, a longstanding concern for O’Leary. Despite standing by Boeing following a mid-flight incident with a 737 Max 9 earlier this year, he has been vocal about the need for improvements from the manufacturer.

O’Leary mentioned that his airline’s customers seem to be experiencing greater financial strain compared to the earlier stages of the post-COVID economic recovery. Reports suggest that prolonged inflation and stagnating economic growth in the European Union are beginning to impact consumer behavior. In light of this, he noted that operating fewer aircraft in the coming years could prove advantageous for Ryanair.

He stated, “We will have less capacity into summer 2025 than we initially expected with our Boeing deliveries, and then, we’re looking at two years of essentially no capacity growth at all. If consumers are under pressure for the next year or 18 months, that might not be the worst situation for us.”

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