Ryanair is expressing dissatisfaction with its recent business performance, leading to disappointment among investors as well. The budget airline’s stock price has dropped by 17% following the release of a quarterly earnings report that fell short of expectations. The company’s revenue remained steady at €3.6 billion ($4 billion), a similar figure to the previous year, but profits saw a significant decline, nearly halving to €336 million. CEO Michael O’Leary noted that while the airline is successfully attracting more passengers, it requires considerable effort to maintain this growth.
Despite reporting a 10% increase in passenger traffic, totaling 55 million, O’Leary emphasized that this growth comes at a price, as the airline has had to significantly lower fares and stimulate bookings. He highlighted that the performance regarding close-in bookings has been disappointing, particularly as the peak months of July, August, and September approach.
Compounding the issue of softer demand, Ryanair is also facing rising labor costs and has attributed some challenges to delays in aircraft deliveries from Boeing, a longstanding frustration for O’Leary. Although he has defended the airline after a mid-flight incident with a 737 Max 9 earlier this year, he has continuously urged Boeing to improve its operations.
O’Leary conveyed to investors that customers seem to be feeling increased pressure as the economic recovery from COVID-19 slows down. Reports indicate that inflation and stagnant economic growth are starting to impact consumers in the European Union. In light of this, he suggested that having fewer aircraft available could be advantageous for Ryanair.
He informed investors that the airline will have reduced capacity for summer 2025 compared to initial Boeing delivery schedules and anticipates two years without capacity growth. O’Leary concluded that if consumer pressures persist over the next year to 18 months, this could prove to be a beneficial position for the airline.