‘Recessionary Feel’ Pan Europe Pushing Down Fares: Micheal O’Leary

Recessionary Feel
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Ryanair has revised its passenger forecast for the year downward as Boeing’s delivery of new aircraft lags behind schedule, signaling potential challenges ahead for the airline’s growth plans.

During the release of the company’s full-year results on Monday, Ryanair CEO Michael O’Leary acknowledged that there might be some “recessionary feel” in the market, as ticket pricing remains softer than anticipated across Europe for the airline.

Despite the lack of capacity in the market, O’Leary expressed puzzlement over the subdued fare prices. However, he noted that when Ryanair stimulates the market with fare deals, there is a significant uptake from 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.”

Shoulder-period bookings refer to 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,” O’Leary added. “So there’s strong volumes out there, and to me, that’s a key thing.”

O’Leary suggested that part of the fare softness might be attributed to some online travel agents delisting the airline’s flights from their systems late last year.

Despite the fare softness, O’Leary remains optimistic that ticket prices will be up to 5% higher during the summer compared to summer 2023, although the airline had initially anticipated a fare increase of 5% to 10% for the period.

Ryanair reported a €1.92 billion profit after tax in the 12 months to the end of March this year, representing a 34% increase. Its revenue rose 25% to €13.4 billion. However, the profit figure fell short of the more than €2.2 billion target needed to trigger a substantial financial windfall for O’Leary, which would grant him 10 million shares at €11.12 each if the airline achieves that profit figure by the end of the 2028 financial year or if the airline’s shares trade above €21 for 28 consecutive days by that date.

As Ryanair grapples with the challenges posed by Boeing’s delivery delays and softening demand, the airline’s ability to achieve its growth targets and meet its financial objectives remains uncertain, underscoring the need for strategic adjustments and innovative approaches to navigate the evolving market conditions.

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