BRUSSELS – On Tuesday, Ryanair (NASDAQ: RYAAY) upgraded its summer airfare outlook, with CEO Michael O’Leary telling Reuters he no longer saw a risk of double-digit percentage falls as European short-haul weakness had “leveled out”.
Ryanair’s shares were up 6.2% at 1245 GMT, the second largest gainer on the pan-European index. Rivals easyJet and Wizz Air were up 6.2% and 6.6%, respectively.
The Irish airline’s shares fell 15% last month when O’Leary warned of a downward trend in fares that could exceed 10% in its key July-September quarter, heightening fears of a weak summer for European airlines as a post-COVID boom peters out.
O’Leary said on Tuesday that a fall of 5% during that period, which he described in July as the best-case scenario, now “looks reasonably accurate”.
The risk of what O’Leary described at the time as an “ugly scenario” of double-digit falls in average fares “looks like it has disappeared,” he said in an interview in Brussels.
“While fares were kind of softening during April, May, and June, that has leveled out,” O’Leary added.
Asked why that was the case, O’Leary said it could be that consumers were willing to spend more during the peak summer months, but conceded: “really, we don’t know”.
The trend in fares is likely to remain slightly downwards as long as consumers are under pressure, he told reporters in London. He said it would be reasonable to expect fares might be down 5% in the six months to the end of March, but added that he was just guessing.
Ryanair (NASDAQ: RYAAY) makes significant profit from high last-minute fares. But in July O’Leary said consumers were refusing to buy late high-price tickets, and only buying when the price was cut.
Asked if Ryanair was still seeing the same issue, O’Leary said current price resistance was “not the same”.
O’Leary also warned that deliveries from Boeing (NYSE: BA) were “continuing to slip slightly” and that there was a risk that Ryanair would take delivery of just 20-25 of the 737 MAX aircraft ahead of next summer, rather than the 29 scheduled.
(Source: ReutersReuters)
