Ryanair is facing challenges in its business performance, leading to disappointment among investors. The Irish low-cost airline’s stock has fallen by 17% following the release of a quarterly earnings report that missed expectations. While revenue remained steady at €3.6 billion ($4 billion) compared to the previous year, profits saw a significant drop, nearly halving to €336 million.
CEO Michael O’Leary highlighted the company’s success in attracting more passengers, with traffic growth reaching 10% and 55 million passengers flying with Ryanair. However, he also noted that this growth comes at a cost, as the airline is having to work harder to maintain prices and stimulate bookings. O’Leary pointed out that close-in fares and performance were below expectations, particularly as the busy summer months approach.
In addition to weaker demand, Ryanair is grappling with rising labor costs and has expressed frustration over Boeing’s ongoing delivery delays, a longstanding issue for the airline that O’Leary has previously criticized. The CEO also observed that consumers seem to be feeling the effects of ongoing economic pressures, such as inflation and sluggish growth within the European Union, which may influence travel behavior.
Looking ahead, O’Leary indicated that Ryanair may operate fewer aircraft than initially planned for summer 2025, leading to a period of no capacity growth. He suggested that this could be advantageous if consumers continue to experience financial strain over the next year and a half, possibly allowing the airline to better manage its resources.
In summary, Ryanair’s current financial struggles reflect broader economic challenges facing consumers, but there is a silver lining in the potential to adjust its capacity strategically in light of these conditions. This proactive approach may position the airline to weather the storm and emerge more resilient in the long run.