5 months ago • 2 mins
What’s going on here?
Ryanair’s profit boomed last quarter – but its touch-and-go forecasts suggest the future’s uncertain.
What does this mean?
Hot on the heels of EasyJet’s record profit, Ryanair – Europe’s biggest airline by passenger numbers – also had a moment in the sun. The cut-price carrier capitalized on a surge in summer demand, which pushed its average airfare up 42% from the same quarter last year. And that uptick helped offset the headwinds of higher fuel prices and employee costs, helping the firm sail to a profit nearly four times greater than last year’s quarterly takings.
But despite setting a new record profit for the period, Ryanair’s long-term future is less clear. First, there are worries about a potential slowdown in travel. And then there are Boeing’s delayed planes, which have forced Ryanair to cut its full-year passenger growth forecast. That uncertainty didn’t sit well with investors, who sent shares down 8%.
Why should I care?
Zooming in: Lofty ambitions and low-low prices.
Penny-pinching customers could actually play into Ryanair’s hands. After all, folk are likely to become more price-sensitive as economic turmoil bites. And that would suit the low-cost carrier just fine – especially given its plan to lower prices even further this winter, when it will have 25% more seats to sell than in 2019. If that pays off, the Irish firm could grab even more of the European market over time, helping to meet its goal of a 30% share come 2034.
The bigger picture: Plane talk.
Travel demand might seem robust now, but make no mistake, customers are already making changes. Case in point: low-cost giants like Ryanair are already seeing an uptick in better-off customers using their services. Plus, over 80% of Brits say the cost of flights has been influencing their destinations, so they’re opting for shorter city breaks over longer beach vacations this summer – and trading down on hotels too.
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