Ryanair has expressed disappointment with its business performance, and investors share this sentiment as the airline’s stock has plummeted 17% following an unexpectedly weak quarterly earnings report. The Irish budget carrier reported revenue of €3.6 billion ($4 billion), which is roughly the same as last year, but profits nearly halved to €336 million. CEO Michael O’Leary noted that while the airline is successfully increasing the number of travelers, it requires significant effort to maintain this growth.
“Traffic growth is strong, with a 10% increase to 55 million passengers, but it comes at a cost,” he stated during the earnings call. He highlighted that they face challenges in stimulating fares and bookings, particularly with disappointing close-in fares leading into the peak travel months of July, August, and September.
In addition to softer demand, Ryanair is grappling with rising labor costs and has attributed some of the difficulties to delays in aircraft deliveries from Boeing, a recurring issue for O’Leary. Even as he supports the handling of incidents like the door plug failure on a 737 Max 9 earlier this year, he has urged Boeing to improve its operations.
Moreover, O’Leary indicated that customers are showing signs of struggling more than in the initial phases of the economic recovery post-COVID-19. Reports suggest that ongoing inflation and sluggish economic growth are beginning to impact consumer behavior in the European Union. This situation might lead to less capacity for the airline, which O’Leary suggested could be beneficial.
“We will have less capacity in summer 2025 than we originally planned with our Boeing deliveries, and we anticipate two years of essentially no growth in capacity,” he explained. “If consumers are under pressure for the next year or 18 months, this could potentially work in Ryanair’s favor.”