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A Ryanair plane departing from Eindven Airport in the Netherlands on August 11, 2022.
London CNN —
The travel industry is defying the global economic downturn, enjoying record bookings and profits as pent-up demand after the pandemic accelerates spending on flights and hotels. But that may be starting to change.
Ryanair (RYAAY), Europe’s biggest airline by passenger numbers, warned on Monday that high inflation and rising interest rates could reduce appetite for air travel in the second half of the year.
“We are concerned about the impact of these macroeconomic trends,” Chief Executive Officer Michael O’Leary said in a video posted on the company’s website, adding that they “could have an impact on consumer spending in the second half of this year.” added.
Shares in the low-cost carrier, the standard-bearer of Europe’s aviation industry, fell as much as 5% on Monday before offsetting losses. British rivals EasyJet (ESYJY) and Jet2 fell by 4.6% and 4% respectively, but made up for some of the losses since then.
Travel is booming again after the pandemic, as people stuck at home for months enjoyed the chance to visit new places and reunite with family and friends. This has allowed airlines such as Ryanair to charge higher fares despite stagnant economic growth in many of its biggest markets.
Late last year, Mr O’Leary dismissed concerns about the impact of an expected European economic downturn on Ryanair’s business as “overblown”.
His comments on Monday come even as Ryanair reported a profit of 663 million euros ($735 million) in the three months to June, as his outlook has become more cautious. Showing. This was almost four times as much as in the same period last year, when bookings were severely affected due to Russia’s full-scale invasion of Ukraine.
Ryanair’s average airfares rose 42% in the latest quarter after last year’s deep discounts, but the airline noted a “softening” in last-minute fares in June and early July.
Mr O’Leary said airlines may need to lower ticket prices to meet ambitious passenger growth targets, especially as inflation and rising mortgage rates weigh on consumer spending. said.
But he remained characteristically optimistic, stressing that Ryanair tends to thrive even in recessions as flyers seek cheap flights.
The company currently expects to carry 183.5 million passengers in the 12 months to March 2024. This is slightly lower than the previous forecast of 185 million passengers due to delays in deliveries of new Boeing 737 aircraft.
Earlier this year, Ryanair agreed to buy up to 300 Boeing 737-10 aircraft in a deal worth $40 billion.
The Dublin-based airline announced on Friday that it plans to return to Ukraine within weeks of the end of the war, but expects “moderate” profit growth for the year.
Last month, the International Air Transport Association announced that the world’s airlines will report a net profit of $9.8 billion in 2023, more than double its December forecast. The latest figures mark a major turnaround for the airline industry, which suffered a net loss of $183 billion between 2020 and 2022 as pandemic lockdowns hit travel.
