Ryanair is expressing dissatisfaction with its recent business performance, leading to disappointment among investors as well. The Irish budget airline has seen its stock plummet by 17% following the release of a quarterly earnings report that fell short of expectations. The revenue for the quarter totaled €3.6 billion ($4 billion), which is comparable to last year, but profits nearly halved to €336 million. CEO Michael O’Leary acknowledged the increased number of passengers, but emphasized the significant effort required to achieve this growth.
During a recent earnings call, O’Leary pointed out that while traffic growth is robust, rising by 10% to 55 million passengers, it is largely driven by pricing strategies. He noted that the need to stimulate fares and bookings repeatedly has been a challenge, and that recent booking performance leading into the peak travel months of July, August, and September has been underwhelming.
In addition to the weaker demand, the airline is facing rising labor costs and has expressed frustrations over delays in aircraft deliveries from Boeing, a longstanding issue for O’Leary. Despite experiencing a mid-flight incident with a 737 Max 9 earlier this year, he has urged Boeing to improve its operations for years.
O’Leary informed investors that customers may be feeling the strain more than during the initial phases of the economic recovery from COVID-19, noting that prolonged inflation and slow economic growth in the European Union are starting to affect spending behaviors. As a result, he mentioned that operating with fewer aircraft might actually benefit Ryanair in the long run.
He shared that the airline will enter summer 2025 with a lower capacity than initially planned due to Boeing delivery changes, followed by two years without capacity growth. O’Leary suggested that if consumer pressure persists for the next year to 18 months, this situation might not be as detrimental for the airline.