Ryanair’s recent business performance has left both the airline and investors disappointed, reflected in a 17% drop in the company’s stock price following a weaker-than-expected quarterly earnings report. The Irish budget airline reported revenues of €3.6 billion ($4 billion), which remained virtually unchanged from the previous year. However, profits nearly halved to €336 million. CEO Michael O’Leary indicated that while the airline is successfully increasing passenger numbers, it is becoming increasingly challenging to do so.
During the earnings call, O’Leary highlighted a strong traffic growth of 10%, equating to 55 million passengers, but emphasized that this growth is heavily dependent on pricing. He noted that the company is continuously compelled to stimulate fares and bookings. O’Leary also expressed disappointment with the weaker-than-expected performance and close-in bookings as the peak travel months of July, August, and September approach.
In addition to declining demand, Ryanair is facing rising labor costs and has attributed some of its struggles to delays in aircraft deliveries from Boeing, a long-standing issue for O’Leary. While he has largely supported Boeing following a mid-flight incident involving a 737 Max 9 earlier this year, he has consistently urged the manufacturer to improve its operations.
O’Leary also observed that consumers appear to be facing more financial strain than during the initial recovery from the COVID-19 pandemic, with reports suggesting that years of inflation and stagnating economic growth are impacting spending within the European Union. As a strategy, O’Leary mentioned that operating fewer aircraft might ultimately benefit Ryanair as it adapts to these economic pressures.
Looking ahead, 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.”