Home Market Report Ryanair sees profits dive after challenging summer

Ryanair sees profits dive after challenging summer

6
0
Ryanair sees profits dive after challenging summer


Ryanair – Europe’s largest budget airline – has reported a significant profit decline and scaled back its growth expectations amid challenges from Boeing aircraft delivery delays, lowered fares, and consumer spending pressures.

For the six-month period ending in September, Ryanair’s net profit dropped by 18% to £1.5bn, down from the same period last year.

The airline attributed this decrease to a combination of factors, including a fall in peak-season fares and increased operational costs.

To attract more passengers, Ryanair had reduced ticket prices by 10% on average compared with the previous year. The move helped it carry a record 115 million passengers, a 9% increase, over the April-to-September period.

However, chief executive Michael O’Leary explained the lower fares had also contributed to the drop in profits.

Fares fell 15% in Ryanair’s fiscal first quarter and 7% in the second, leading to a summer average fare of £43.

The airline’s discounted fares created a mixed outlook, as lower ticket prices meant slimmer profit margins, but they enabled Ryanair to capture a greater market share and draw passengers from rival carriers.

Image:
Michael O’Leary. Pic: Reuters

Ryanair sparked industry concerns earlier in the summer when it warned of falling ticket prices – a departure from the post-pandemic surge in air travel demand.

The airline’s operational challenges were exacerbated by delays in the delivery of Boeing’s 737 Max-10 aircraft.

The airline had initially planned for substantial growth by expanding its fleet with these new planes, but Boeing’s production delays, exacerbated by worker strikes and supply chain issues, meant that only 172 out of 300 ordered planes have been delivered.

Mr O’Leary expressed frustration over these setbacks, explaining the delayed deliveries left Ryanair “over-scheduled, over-crewed, and over-costed” during the busy summer months.

Please use Chrome browser for a more accessible video player

August: Flight prices to come down even further

Although Boeing has provided compensation for the delays, it has not covered the costs of the more than five million additional passengers Ryanair could have transported with a fully operational fleet.

As a result, Ryanair has tempered its growth forecasts, revising its full-year traffic projection from 215 million to 210 million passengers. Mr O’Leary noted that while the airline is working closely with Boeing to speed up deliveries ahead of peak summer 2025, further delays remain a risk.

“We believe it is sensible to moderate Ryanair’s full-year traffic growth target to reflect these delivery delays,” he said.

Follow Sky News on WhatsApp
Follow Sky News on WhatsApp

Keep up with all the latest news from the UK and around the world by following Sky News

Tap here

Despite these challenges, Ryanair remains optimistic about demand.

The airline expects fares to rise over the winter months as demand continues to grow, potentially restoring 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 report financial results this quarter, Ryanair’s outlook on ticket pricing and passenger demand will be closely watched by the aviation industry.

While the carrier navigates both operational and economic headwinds, its ability to attract record passenger volumes highlights the appeal of low-cost air travel, even in a challenging market.



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here