Ryanair – Europe’s largest budget airline – reported a significant drop in profits and trimmed its growth forecast amid challenges caused by Boeing aircraft delivery delays, falling prices and consumer spending pressures.
For the six-month period to September, Ryanair’s net profit fell 18% to £1.5bn, down on the same period last year.
The airline attributed this decrease to a combination of factors, including lower prices in the peak season and increased operating costs.
To attract more passengers, Ryanair reduced ticket prices by 10% on average compared to the previous year. The move helped transport a record 115 million passengers, an increase of 9%, during the period from April to September.
However, CEO Michael O’Leary explained that lower prices also contributed to lower profits.
Fares fell by 15% in Ryanair’s first financial quarter and 7% in Q2, resulting in an average summer fare of £43.
The airline’s reduced prices created mixed expectations, as lower ticket prices meant lower profit margins, but enabled Ryanair to capture a larger market share and attract passengers from competing airlines.
Michael O’Leary. Photo: Reuters
Ryanair raised industry concerns earlier in the summer when it warned of falling ticket prices – a departure from the surge in demand for air travel following the pandemic.
The operational challenges faced by the airline were exacerbated by delays in the delivery of Boeing 737 MAX 10 aircraft.
The airline initially planned to achieve significant growth by expanding its fleet with these new aircraft, but Boeing’s production delays, exacerbated by worker strikes and supply chain issues, meant that only 172 of the 300 aircraft it ordered were delivered.
Mr O’Leary expressed frustration at the setbacks, explaining that delayed deliveries had left Ryanair “overscheduled, overstaffed and overcharged” during the busy summer months.
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Although Boeing provided compensation for the delay, it did not cover the costs of more than five million additional passengers that Ryanair could have carried with a fully operational fleet.
As a result, Ryanair lowered its growth forecast, revising its full-year traffic forecast from 215 million to 210 million passengers. O’Leary noted that while the airline is working closely with Boeing to speed up deliveries before the summer 2025 peak, further delays still pose a risk.
“We believe it is reasonable to ease Ryanair’s full-year traffic growth target to reflect these delivery delays,” he said.
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Despite these challenges, Ryanair remains optimistic about demand.
The airline expects prices to rise during the winter months as demand continues to grow, which could restore its profit margins. However, it also acknowledged other potential obstacles, including ongoing staff shortages and geopolitical risks from conflicts in Ukraine and the Middle East.
As the first European budget airline to announce its financial results for the quarter, Ryanair’s forecasts for ticket prices and passenger demand will be closely watched by the airline industry.
While the carrier faces operational and economic headwinds, its ability to attract record numbers of passengers highlights the appeal of low-cost air travel, even in a challenging market.