Ryanair is facing challenges in its business performance, leading to disappointment among investors. The Irish low-cost airline’s stock has dropped by 17% following a quarterly earnings report that fell short of expectations. Revenue remained at €3.6 billion ($4 billion), the same as the previous year, but profits plummeted nearly 50% to €336 million. CEO Michael O’Leary noted an increase in passenger numbers, with traffic climbing 10% to 55 million, but indicated that this growth comes with significant effort.
During the company’s earnings call, O’Leary stated, “Traffic growth is strong, but it’s only strong at a price,” explaining that the airline has been compelled to continuously incentivize ticket sales. He also expressed disappointment over close-in bookings, which have been weaker than anticipated, especially heading into the peak travel months of July, August, and September.
Compounding the issue of softer demand, Ryanair is also grappling with rising labor costs and has attributed some difficulties to Boeing’s ongoing delivery delays. O’Leary, who has expressed frustration with the aircraft manufacturer in the past, remains steadfast in his defense of the airline despite technical incidents, including a mid-flight emergency involving a 737 Max 9 this year.
Additionally, he indicated that customers are beginning to feel the pressures of economic challenges in the European Union, as years of inflation and stagnant growth take a toll. In light of this, O’Leary mentioned that reducing the number of aircraft may ultimately benefit Ryanair.
“We will have less capacity in summer 2025 than we initially planned due to Boeing delays, and following that, we expect two years with no growth in capacity,” O’Leary noted. “If consumer pressures continue for the next 12 to 18 months, this might not be the worst position for us to be in.”