Ryanair is expressing dissatisfaction with its recent business performance, leading to disappointment among investors. The Irish budget airline’s stock has declined by 17% following the announcement of weaker-than-anticipated quarterly earnings. The company’s revenue was reported at €3.6 billion ($4 billion), remaining stable compared to the previous year, but profits significantly dropped to €336 million.
CEO Michael O’Leary highlighted that while passenger traffic has increased by 10% to 55 million, achieving this growth has required considerable effort. During the earnings call, he stated, “Traffic growth is strong, but it’s only strong at a price,” emphasizing the need to continuously stimulate fares and bookings. He noted that performance in close-in fares and bookings has been disappointingly weaker than expected, particularly as the peak months of July, August, and September approached.
In addition to the lackluster demand, Ryanair is facing rising labor costs and has attributed some challenges to delays in aircraft deliveries from Boeing. Despite standing by the manufacturer following a mid-flight incident with a 737 Max 9 earlier this year, O’Leary has been urging Boeing to improve its operations for years.
O’Leary also mentioned that Ryanair’s customers seem to be feeling more economic pressure compared to the initial stages of the COVID-19 recovery, with the lingering effects of inflation and stagnant growth impacting consumers within the European Union. He speculated that operating fewer aircraft might be advantageous for the airline in the current climate.
Looking ahead, O’Leary indicated that Ryanair will have reduced capacity by summer 2025 compared to original delivery schedules from Boeing, leading to two years of minimal capacity growth. He suggested that if consumer pressures continue over the next year to 18 months, this might position Ryanair favorably amidst the challenges.