Connect with us

Bussiness

Ryanair’s Michael O’Leary thinks ‘recessionary feel’ across Europe is pushing down fares

Published

on

Ryanair’s Michael O’Leary thinks ‘recessionary feel’ across Europe is pushing down fares

As the carrier released full-year results on Monday, Mr O’Leary was at a loss to explain why fare prices have remained subdued given the lack of capacity in the market. However, he pointed out that when Ryanair stimulates the market with fare deals, there is significant uptake by consumers.

“It’s just a little bit softer out there than we expected,” he said. “There appears to be some degree of consumer resistance. There may be some kind of recessionary feel out there. There’s not a lot of consumer spending or confidence across Europe in consumer spending, and maybe that’s reflected in what we could call shoulder-period bookings.”

Such bookings are those made between peak and off-peak seasonal travel times.

“When we engage in price stimulation, as we have done in the last four or five weeks, we see strong volumes,” he added. “So there’s strong volumes out there and to me that’s a key thing.”

It’s just a little bit softer out there than we expected

He said some small part of the fare softness might be due to some online travel agents delisting the airline’s flights from their systems late last year.

Mr O’Leary said despite the fare softness, he still thinks ticket prices will be up to 5pc higher during the summer than they were in summer 2023.

But the airline had anticipated that fares would be between 5pc and 10pc higher for the period.

Ryanair said it made a €1.92bn profit after tax in the 12 months to the end of March this year, which was up 34pc. Its revenue rose 25pc to €13.4bn. The profit figure was – as anticipated – below the more than €2.2bn figure that is needed to trigger a huge financial windfall for Mr O’Leary. He can secure 10 million shares at €11.12 each if the airline achieves that profit figure by the end of the 2028 financial year.

Alternatively, it can be triggered if the airline’s shares trade above €21 for 28 consecutive days by that date.

Ryanair expects to carry between 198 million and 200 million passengers in the year to next March. Photo: PA

Despite the shares dipping to €18 on Monday, one of the outcomes is a virtual certainty – bar some major negative economic, geopolitical or corporate event.

The carrier has also announced a €700m share buyback that will be undertaken over the next six months. Mr O’Leary added that Ryanair’s average fare rose 21pc in the last financial year.

He said this was “badly needed”, as fuel costs jumped 35pc.

Ryanair expects to carry between 198 million and 200 million passengers in the year to next March.

While that is 8pc ahead of the 183.7 million it carried in the 2024 financial year, it is less than the 205 million it had expected for the 2025 financial year.

The carrier will have 23 fewer of the Boeing 737 Max jets this summer than it had anticipated under its contract due to the US plane-maker’s difficulties.

Mr O’Leary added that he does not think the planned acquisition by embattled Boeing of fuselage maker Spirit “will make much difference one way or the other”. He said the turnaround of fuselages at Boeing to make jets is still much longer than expected.

“But we think Stephanie Pope [Boeing’s chief operating officer] and the team at Seattle are doing a much better job,” he added.

Continue Reading