Ryanair is facing disappointment regarding its recent business performance, which has also affected investor sentiment. The stock of the Irish budget airline has fallen by 17% following the release of a quarterly earnings report that fell short of expectations. The airline reported revenues of €3.6 billion (approximately $4 billion), nearly identical to last year, but profits plummeted to €336 million, a near 50% decrease. CEO Michael O’Leary acknowledged that while there is an increase in the number of people flying—up 10% to 55 million passengers—this has come at a cost, requiring significant effort to maintain fares and bookings.
During the earnings call, O’Leary pointed out that although traffic growth appears robust, it hinges on aggressive pricing strategies. He noted that close-in bookings have performed poorly, especially as the company approaches the peak travel months of July, August, and September.
In addition to weak demand, Ryanair is grappling with rising labor costs, and O’Leary attributed part of the issues to delays in aircraft deliveries from Boeing, a persistent concern for him. Despite standing by the company following a disturbing incident involving a 737 Max 9, he has consistently urged Boeing to improve its performance.
O’Leary remarked that Ryanair’s customers seem to be feeling the pressure as inflation and slow economic growth begin to impact consumers in the European Union. He suggested that operating a smaller fleet might be beneficial for the airline in this economic climate. He confirmed that Ryanair will have reduced capacity for the summer of 2025 compared to initial schedules due to Boeing’s delays, with two years of no capacity growth anticipated. He indicated that if consumer spending remains constrained for the next year to 18 months, this could potentially work in Ryanair’s favor.