Ryanair CEO Michael O’Leary says business model is fine after rival avoids slump in fares

Ryanair’s RYAAY-Q CEO said easyJet’s much better fare performance in the April-June quarter did not indicate flaws in his airline’s strategy, but were due to its rival’s weaker prior year comparisons and slower traffic growth.

Ryanair’s share price posted its sharpest daily fall since 2016 on Monday, after it released quarterly results that showed average fare falls of 15%, while easyJet on Wednesday said revenue per seat for the quarter was up 1%, lifting its shares more than 4%.

“They’re doing better than us on pricing but growing a lot less, they still haven’t recovered their pre-COVID traffic,” Michael O’Leary said in an interview with Reuters on Wednesday.

The 55.5 million passengers Ryanair flew from April to June was 32% higher than the same quarter in 2019, while easyJet’s 25.3 million was 4% lower than the equivalent period in 2019.

“We are growing very strongly in lots of new markets and our pricing is, I would say, marginally weaker than theirs but we don’t think there’s anything fundamentally broken or wrong with the model.”

Ryanair, which flew 10% more passengers year-on-year in the last quarter, has been growing strongly in new markets such as Albania, while also opening new routes in its biggest markets such as Italy.

A boycott by some online travel agents was also a minor factor in the weakness of Ryanair’s average fares, O’Leary added. A number of agents have stopped selling Ryanair’s tickets, but others have agreed new deals to allow sales.

O’Leary on Monday said the trend in fares was “downwards and weaker” but easyJet CEO Johan Lundgren told journalists on Wednesday that the pricing environment was very similar to last year.

“If easyJet are right and prices are flat in the September quarter, then we'll come in a little bit better than our -5%,” he said, referring to the best-case forecast given for the decline in average fares for the July to September quarter.

“But we think it’s more likely to be pricing down 5%-plus,” he said.