Ryanair Surpasses Profit Forecasts on Higher Fares but Lowers Traffic Expectations

Ryanair, Europe's largest low-cost carrier, has reported a stronger-than-expected profit for the final three months of 2024, driven by an uptick in airfares. However, the airline has also adjusted its traffic outlook downwards due to ongoing delays in aircraft deliveries from Boeing. This mixed financial performance was announced on January 27, 2025, offering a nuanced view of the airline's operational and financial health amidst a challenging industry environment. The company's after-tax profit for the quarter ending December 31, 2024, reached €149 million, significantly surpassing the €60 million that analysts had anticipated based on a company poll. This impressive performance was largely attributed to a 1% increase in average fares during this period, a welcome recovery from the 7% decrease seen in the previous quarter. Chief Executive Michael O'Leary attributed this improvement to constrained capacity across Europe, with Ryanair capitalizing on a market where supply couldn't meet demand, especially during the holiday season with good last-minute bookings for Christmas and New Year.

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Despite the positive profit news, Ryanair was forced to recalibrate its passenger traffic expectations. Originally, the airline had forecasted 215 million passengers for the year ending March 2026. This was revised down to 210 million and now further reduced to 206 million due to persistent delays in receiving Boeing 737 MAX aircraft. The airline was expecting to take delivery of nine new MAX jets by the peak summer season, but this number is less than previously hoped, impacting Ryanair's capacity to expand its flight schedule as planned. O'Leary, while cautiously optimistic about fare trends moving into the summer of 2025, acknowledged the challenges posed by these delivery delays. He noted that with only 29 more aircraft expected from Boeing by March 2026, Ryanair would need to manage its growth expectations carefully. The CEO expressed confidence in the delivery timeline for the remaining jets, based on recent visits to Boeing's production facilities, but admitted the summer would not see the full benefit of the expected fleet expansion.

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This adjustment in traffic forecasts comes after Ryanair had already experienced a year of fluctuating fares, with a 10% drop over the two summer quarters of 2024. This was partly due to a resolved dispute with online travel agents, which had previously impacted fare levels. The 1% fare increase in the last quarter of the year signals a potential stabilization or even an upward trend, which Ryanair hopes to leverage into the traditionally lucrative summer season. The airline's shares reacted positively to the profit news but were tempered by the traffic outlook revision. Ryanair's stock saw a 3% increase following the announcement, reflecting investor confidence in the company's ability to navigate through operational challenges while maintaining profitability.

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Looking forward, Ryanair has set its after-tax profit guidance for the 12 months to March 31, 2025, between €1.55 billion and €1.61 billion. This range reflects a cautious approach, considering not just the aircraft delivery issues but also external factors like potential geopolitical tensions, air traffic control mismanagement, or further supply chain disruptions. In summary, while Ryanair's recent profit figures offer a positive end to 2024, the airline faces significant hurdles in expanding its operations due to external supply constraints. The ability to maintain fare levels, adapt to reduced fleet growth, and continue delivering shareholder value will be key to Ryanair's strategy in the coming months. This situation underscores the volatile nature of the airline industry, where even positive financial outcomes are shadowed by operational uncertainties.

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