Ryanair is expressing disappointment with its recent business performance, a sentiment echoed by its investors, as the airline’s stock has plummeted by 17% following a lackluster quarterly earnings report. The Irish budget airline reported revenues of €3.6 billion ($4 billion), matching last year’s figures, but profits nearly halved to €336 million. CEO Michael O’Leary noted that while the airline is successfully increasing passenger numbers, it is facing significant challenges in maintaining profitability.
O’Leary mentioned on the earnings call that traffic growth was solid, with passenger numbers rising 10% to 55 million, but added that this growth comes at a cost. “We’re having to repeatedly stimulate fares and bookings,” he remarked, highlighting disappointing close-in fares and bookings, especially as the peak summer months approach.
In addition to weaker demand, Ryanair is contending with rising labor costs and has pointed fingers at Boeing for delivery delays, a recurring issue for O’Leary. While he has supported Boeing after an incident involving a 737 Max 9 earlier this year, he has also consistently urged the aircraft manufacturer to improve its operations.
Furthermore, O’Leary indicated that Ryanair’s customers might be feeling the economic pressure more acutely as recovery from the COVID-19 pandemic continues. Reports suggest that prolonged inflation and sluggish growth in the European Union are impacting consumer behavior. This situation may lead to a reduction in the number of aircraft in operation, which O’Leary suggested could benefit Ryanair.
He noted, “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,” adding that if consumer pressure persists for the next year or 18 months, it may not be detrimental for the airline.