Budget carrier Ryanair has reported a 16% decline in annual earnings due to reduced air fares aimed at stimulating demand. However, the airline plans to increase prices to drive growth. Ryanair’s pre-tax profits decreased to €1.78 billion (£1.5 billion) for the year ending March 31, down from €2.13 billion (£1.79 billion), as average fares dropped by 7%. After-tax profits also fell by 16% to €1.61 billion (£1.35 billion).
Although lower fares contributed to a 9% rise in passenger numbers to 200.2 million, the airline anticipates only 3% growth in 2025-26 due to delayed Boeing aircraft deliveries. Fares are expected to rise significantly, with a predicted increase of “mid-high teen percent” year-over-year in the first quarter. The airline also hopes to recover some of the 7% fare decline from the previous year during the key summer quarter.
Chief Executive Michael O’Leary said: “While we cautiously expect to recover most but not all of last year’s 7% fare decline, which should lead to reasonable net profit growth in 2025-26, it is far too early to provide any meaningful guidance.”
He emphasised that the final 2025-26 outcome remains vulnerable to various external factors, including tariff wars, macroeconomic shocks, conflict escalation in Ukraine and the Middle East, and European air traffic control issues.
The group said it resorted to fare reductions last year in an attempt to increase passenger numbers, amid a squeeze on consumer spending, the timing of Easter, and a significant decrease in bookings through online travel agencies.
In addition, it has repeatedly cut its passenger forecasts due to issues with Boeing aircraft.
Airlines have been impacted by Boeing’s troubles. Boeing suffered greatly from a prolonged strike at the end of last year. The aerospace giant has also had to reduce production of its 737 Max aircraft following a door panel blowout on a commercial flight in January last year.
Tariff concerns are further complicating matters, with Ryanair recently cautioning that aircraft deliveries may be postponed if tariffs imposed by US President Donald Trump make them more costly.
