Ryanair CEO promises to allocate capacity growth to regions abolishing aviation taxes

Ryanair has signalled a strategic shift toward airports that eliminate aviation taxes or offer incentives to boost passenger traffic.

“This year our constrained capacity growth is being allocated to those regions and airports who are abolishing aviation taxes and incentivising traffic growth,” said Ryanair CEO Mr O’Leary.

The company has also outlined plans to reach 300 million passengers by 2034, a target it says is supported by current fleet expansion, financial stability, and broader market trends such as ongoing airline consolidation in Europe.

The numbers

Ryanair Holdings plc has announced a profit after tax of €1.61 billion for the fiscal year ended 31st March 2025, a robust performance despite a seven per cent drop in average fares and significant aircraft delivery delays.

With over 160 new routes, the group has also marked a milestone by becoming the first EU airline to carry more than 200 million passengers in a single year, a nine per cent increase in traffic compared to the previous year.

CEO Michael O’Leary described the performance as the product of “price stimulation” and strategic cost control in a year defined by external pressures, including inflation, macroeconomic uncertainty, and disrupted supply chains in the aviation sector.

“The key feature of last year’s result was the seven per cent decline in fares which drove strong traffic growth,” Mr O’Leary noted, highlighting how Ryanair adapted to consumer price sensitivity through strategic pricing, while ancillary revenues grew by 10 per cent to €4.72 billion.

Total revenue rose by four per cent to €13.95 billion, despite weaker-than-expected performance in Q1 due to the absence of the Easter holiday, inflationary pressures, and a slowdown in online travel agency (OTA) bookings.

Operating costs rose by nine per cent to €12.39 billion, on a per-passenger basis, as fuel hedging offset higher staff and operational expenses, some linked to delays in Boeing deliveries.

Ryanair’s average cost per passenger remained steady, widening its cost advantage over other EU airlines.

The group also continued its shareholder return strategy, announcing a final dividend of €0.227 per share (subject to AGM approval) and buying back seven per cent of its shares during the year.

Looking ahead

The airline’s current fleet includes 181 Boeing 737-8200 “Gamechangers” within a total of 618 aircrafts. With only modest delivery increases expected this year, Ryanair has capped its forecasted 2026 growth at three per cent, projecting 206 million passengers, largely due to the delays by Boeing.

“We are increasingly confident that delayed deliveries will catch up ahead of S.26,” he said, adding that constrained capacity across Europe, due to aircraft delivery backlogs and engine repair issues, is expected to favour Ryanair’s cost-driven expansion strategy.

“We expect European short-haul capacity to remain constrained for the next few years as many of Europe’s Airbus operators are still working through Pratt & Whitney engine repairs, the big 2 OEMs are well behind on aircraft deliveries, and EU airline consolidation continues (incl. the upcoming sale of TAP),” Mr O’Leary said.

Challenges and sector watchpoints

Looking ahead, Ryanair expects modest unit cost inflation in financial year 2026, driven by new regulatory costs including the phase-out of free emissions allowances and a Sustainable Aviation Fuel (SAF) mandate initiated in January 2025.

Though Q1 bookings are trending ahead of last year, bolstered by a full Easter period, Mr O’Leary struck a cautious note, citing uncertainties such as global conflicts, macroeconomic shifts, tariff risks, and ongoing air traffic control staffing issues in Europe.

“While we cautiously expect to recover most, but not all of last years seven per cent fare decline, which should lead to reasonable net profit growth in 2026, it is far too early to provide any meaningful guidance,” he said.

Mr O’Leary concluded: “The final FY26 outcome remains heavily exposed to adverse external developments, including the risk of tariff wars, macro-economic shocks, conflict escalation in Ukraine and the Middle East and European ATC mismanagement or short staffing.”