Ryanair 'ahead of target' to recover 7% fare decline, says Michael O'Leary

Meanwhile European Commission says Spain breached regulations with fines imposed for charging extra fees on cabin bags 

Ryanair chief executive Michael O'Leary believes the airline is on track to recover its 7% fare decline from 2024 this financial year. Picture: PA

Ryanair believes it is on track to recover its 7% fare decline from 2024 this financial year, chief executive Michael O'Leary said in Madrid on Wednesday.

"The traffic is ahead of target. Fares look like they will rise by 7% for the full year," Mr O'Leary said, adding this summer's fares were "pretty much" at levels recorded in the summer of 2023.

The CEO said full-year results would, however, depend heavily on pricing in the company's third quarter — which includes the Christmas season —
and in the fourth quarter, for which it currently had "very little visibility".

He added that economic weakness in Britain and France was leading to price sensitivity, prompting consumers in those countries to trade down to Ryanair from flag carriers like British Airways or Air France.

"At the moment there seems to be less demand for trans-Atlantic travel to America — I think (US president Donald) Trump has kind of alienated people — and more people are holidaying around the Mediterranean and Europe, and that has been very good for Ryanair's business," Mr O'Leary said.

Meanwhile the European Commission on Wednesday said fines imposed by Spain on Ryanair and other budget airlines for charging extra fees on cabin bags breached regulations.

The Spanish consumer rights ministry last year fined Ryanair, easyJet, Norwegian, IAG's low-cost unit Vueling, and Volotea a combined €179m for practices such as charging for cabin luggage.

Such fines are a challenge to budget airlines' business model, which hinges on low ticket prices while charging for extras like larger hand luggage that were traditionally included in the price. 

But the commission said the fines breached the EU law on air services, which gives airlines "freedom to set their prices".

"The commission is therefore sending a letter of formal notice to Spain, which now has two months to respond and address the shortcomings," it said.

The letter opens a so-called infringement procedure that could ultimately take the case to the EU's Court of Justice.

Pablo Bustinduy, Spanish consumer rights minister, accused the commission of siding with airlines against consumers, and said Spain will go to the EU tribunal and "defend with all rigour our position".

Mr O'Leary said the commission had in fact sided with consumers, who benefit from broader price options.

Meanwhile, Mr O'Leary said Ryanair plans to add 600,000 seats at major Spanish airports like Madrid but that it will cut up to 1.2m seats at smaller airports if it cannot reach agreement in its row over landing chargers and tariffs with Spain's airport operator, Aena. 

Ryanair is confident Boeing will get permission to boost the monthly production rate of its flagship 737 model to 42 in October and then 48 by March or April next year. 

Boeing is trying to stabilise production after a mid-air panel blowout on a new 737 MAX in January 2024 exposed widespread production quality and safety problems.

Mr O'Leary said he was "fairly confident" that the US Federal Aviation Administration (FAA) would sign off on an increase in monthly production from 38 to 42 in October. 

"Will the FAA then allow them to go to rate 48 next March, April, which is... the next big jump? We're pretty confident that will happen."

Reuters