Ryanair is facing disappointment in its business performance, which is reflected in the 17% drop in its stock following a less-than-expected quarterly earnings report. The Irish budget airline reported revenues of €3.6 billion ($4 billion), comparable to last year, but profits plummeted nearly 50% to €336 million. CEO Michael O’Leary mentioned that while more passengers are flying with the company, the effort required to achieve this increase is substantial.
During the earnings call, O’Leary highlighted that traffic grew by 10% to 55 million passengers, but emphasized that this growth comes at a cost. He noted that the company has been required to frequently adjust fares and bookings, and the immediate fare performance and bookings have fallen short of expectations, particularly as peak travel months approach.
In addition to weaker demand, Ryanair is grappling with rising labor costs and has partially attributed its challenges to ongoing delays in airplane deliveries from Boeing, a persistent issue for O’Leary. While he has defended the company following a mid-flight incident with a 737 Max 9 earlier this year, he continues to call on Boeing for improved performance.
O’Leary also informed investors that customers appear to be experiencing tougher financial conditions than in the earlier stages of the post-COVID economic recovery. Reports indicate that inflation and stagnant economic growth are taking a toll on consumers within the European Union. In light of this, O’Leary suggested that operating fewer aircraft might ultimately benefit Ryanair.
He stated, “We will have less capacity in summer 2025 than we were originally scheduled to achieve with our Boeing deliveries, resulting in two years of essentially no capacity growth. If consumers are under pressure for the next year or 18 months, that might actually place us in a favorable position.”