(Dec 23): In a year of restrained economic optimism in Europe, investors flocked to a no-thrills airline known for its cost control and focus.
Ryanair Holdings plc’s stock climbed 55% this year, making it the best European performer in the Bloomberg World Airlines Index after Norwegian Air Shuttle AS. The Irish carrier has flown past peers due to its operational efficiency and earnings growth, underpinned by a €750 million share buyback.
The sector index has jumped 22% this year, on track for its best performance since 2017. Europe’s long-haul specialists Air France-KLM, Deutsche Lufthansa AG and British Airways parent IAG SA all advanced, while the continent’s other leading budget carriers, such as EasyJet plc, Wizz Air Holdings plc and Jet2 plc, declined.
Even with Ryanair’s shares trading near record highs, analysts remain optimistic, with 17 buy ratings on the stock, compared with just five holds and a single sell recommendation.
“It’s got a singular focus and execution of its business model with a long established management team, and driven by having the lowest cost base, and possibly the strongest balance sheet as well,” said Stephen Furlong, an analyst at Davy.
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Weak comparisons with the previous year helped boost its stock performance. Delayed aircraft deliveries from Boeing Co strained capacity growth throughout 2024 while a battle with third-party online travel agencies forced the carrier to cut prices, hitting revenues during the busy summer season.
As for 2025, a revival in travel demand led Ryanair to more than double its net income in the first quarter. The airline has since lifted its passenger growth for the year ending in March off the back of early Boeing deliveries.
Ryanair has been able to allocate aircraft to favourable markets when needed, both as a protest to environmental taxes and fees and as a way to maximise efficiency.
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Technical factors, including a change to ownership and control rules, were also constructive. In March, the company allowed non-EU nationals to own shares. Investors who had previously been holding American depositary receipts were incentivised to buy the ordinary share, boosting liquidity and more efficient buying, according to Barclays plc analyst Andrew Lobbenberg.
These tailwinds came as EasyJet struggled to keep costs down, Jet2 warned of uncertain consumer demand and Wizz Air grappled with Pratt & Whitney engine maintenance issues that led to the company ceasing its Abu Dhabi operations. On the other hand, Norwegian Air recovered from Covid-era restructuring with strong profits and issued its first ever dividend, boosting its shares.
Ryanair’s biggest challenges include rising unit costs and the threat of increased levies on flying in Europe versus other forms of transport, such as rail, which could dampen demand from the airline’s cost-conscious customers.
On the upside, Ryanair is expected to receive delivery of the remaining six Max 8 aircraft it ordered before summer, allowing the airline to grow its network ahead of the peak travel period.
“We have a much better unit cost discipline and I think our fares will trend up,” Ryanair chief executive officer Michael O’Leary said on Nov 3. He warned that European peers including EasyJet, Lufthansa and Air France-KLM “have no future unless they constrain capacity and get airfares up for the next year or two”.
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