Ryanair Earnings Call Highlights Growth Amid Manageable Risks

Ryanair ((RYAAY)) has held its Q3 earnings call. Read on for the main highlights of the call.

Ryanair Earnings Call Balances Strong Growth With Manageable Headwinds

Ryanair’s latest earnings call painted a broadly positive picture, blending solid operational momentum with disciplined financial management, while acknowledging a handful of notable headwinds. Management emphasized recovering traffic and fares, robust revenue growth, tight cost control, strong fuel hedging, and a fortress balance sheet that supports both growth and generous shareholder returns. The main negatives were a sharp year-on-year drop in quarterly profit, driven by the absence of Boeing compensation, and an exceptional provision for an Italian regulatory fine. Still, management framed these issues as manageable and reiterated confidence in both near-term guidance and ambitious long-term growth plans.

Solid Q3 Traffic and Load Factor Performance

Ryanair reported another quarter of traffic growth, with Q3 passenger numbers rising 6% to 47.5 million. Crucially, this increase in volume did not come at the expense of efficiency, as the airline maintained a high load factor of 92%. This combination of rising traffic and strong load factors signals resilient demand and effective capacity management at a time when many airlines are still fine-tuning post-pandemic schedules and networks.

Revenue and Fares Continue to Trend Higher

Revenue growth remained a highlight, with Q3 revenue up 9% to €3.21 billion. Average fares increased 4% in the quarter, while revenue per passenger rose 3%, supported by solid ancillary performance, where add-on revenues grew 7% and were up 1% per passenger. These metrics underline Ryanair’s ability to nudge pricing higher without dampening demand, while steadily extracting more value from each passenger through extras such as priority boarding, seat selection, and baggage.

Profit Guidance and Full-Year Outlook Tightened Higher

Despite quarterly profit pressure, Ryanair maintained a confident full-year outlook. Management now guides FY ’26 profit after tax (pre-exceptionals) in a range of €2.13–2.23 billion, while indicating that full-year fares are likely to be around 8–9% higher versus prior expectations of about 7%. This implies ongoing pricing power and demand resilience, even as the broader macro environment remains uncertain. The tone around the outlook was cautious but optimistic, with management balancing upside from fares and traffic against persistent external risks.

Traffic Targets Raised and Long-Term Growth Ambitions Reaffirmed

Ryanair nudged its near-term traffic guidance higher and reiterated an ambitious long-term growth runway. FY ’26 traffic is now expected to reach about 208 million passengers, representing 4% year-on-year growth, with a further increase to 216 million in FY ’27, also up 4%. Looking further out, the airline reiterated its long-term goal of carrying 300 million passengers by FY ’34, underpinned by its large order for Boeing MAX 10 aircraft. These targets underscore Ryanair’s intent to keep gaining share in European short-haul, particularly as industry-wide capacity remains constrained.

Fleet Expansion and MAX 10 Delivery Timetable

On the fleet side, Ryanair continues to progress its modernization and expansion plans. The airline currently operates 206 “Gamechanger” Boeing aircraft, with the final four of this tranche due by February, bringing the total to 210. Looking ahead, Boeing MAX 10 certification is now expected around summer 2026, with the first 15 MAX 10 deliveries penciled in for spring 2027. This marks the start of a decade-long growth phase powered by a 300-strong MAX 10 order book, which should provide fuel efficiency gains and additional seats per flight to support both capacity growth and cost competitiveness.

Fuel Hedging Locks In Cost Advantages

Ryanair’s fuel strategy remains a key pillar of its cost advantage. For Q4 FY ’26, about 84% of jet fuel needs are hedged at roughly $76–77 per barrel, providing near-term visibility. More importantly, roughly 80% of FY ’27 fuel is already hedged at $67 per barrel, which management estimates will deliver around a 10% saving compared with current market levels. With euro/dollar exposure also largely fixed at about €1.15 for next year, the airline has substantially de-risked two major cost lines, giving it more flexibility to manage fares and capacity in a volatile environment.

Cost Control Keeps Unit Costs Flat

Cost discipline was another recurring theme of the call. Excluding the Italian AGCM issue, total Q3 costs rose 6% to €3.11 billion, broadly in line with traffic growth. Unit costs (pre-exceptional) were flat year-on-year in the quarter, a notable achievement given industry-wide inflation in wages, airport charges, and regulatory costs. This performance underscores Ryanair’s continued reputation as one of Europe’s lowest-cost carriers, supporting its ability to undercut competitors on price while still generating healthy margins.

Strong Balance Sheet Supports Capital Returns

Ryanair highlighted the strength of its balance sheet as a key strategic asset. The company reported gross cash of €2.4 billion and net cash of around €1 billion, alongside BBB+ credit ratings. Management confirmed that it remains on track to repay a €1.2 billion bond maturing in May 2026, effectively moving the group toward a near debt-free position. This financial strength supports both growth investments and shareholder distributions, providing a cushion against external shocks.

Shareholder Returns and Benchmark-Beating TSR

Capital returns featured prominently, reflecting Ryanair’s confidence in its cash generation. The company has launched a €750 million share buyback, of which about 46% has already been completed, representing roughly €340 million spent on 13.1 million shares at an average price of €26. In addition, an interim dividend of around €0.19 per share was declared. Over the past three years, this combination of growth and capital returns has delivered a total shareholder return of roughly 153%, placing Ryanair in the upper quartile of the Stoxx Europe 600 and reinforcing its appeal to equity investors.

Q3 Profit Decline Driven by One-Off Factors

Despite the operational and revenue strength, Q3 profit after tax (pre-exceptionals) fell 22% year-on-year to €115 million. Management attributed this largely to the absence of Boeing delivery compensation that had benefited the prior-year quarter. Without that one-off tailwind, the underlying performance still looked solid, but the headline comparison appeared weaker. Investors are likely to focus on the sustainability of current fares and cost control as the key drivers of profit normalization beyond these timing and exceptional effects.

Italian AGCM Fine and Exceptional Provision

A major talking point was the Italian competition authority’s €256 million fine. Ryanair has booked an exceptional provision of €85 million, equivalent to around 33% of the total, while stating it is confident of overturning the ruling on appeal. Management described the provision as conservative but necessary given accounting rules. While this issue introduces legal uncertainty and headline risk, the company framed it as manageable relative to its cash position and profit outlook, and indicated that it would pursue all available legal avenues.

Loss of Boeing Compensation Weighs on Comparisons

The prior year’s results benefited from compensation paid by Boeing for delayed aircraft deliveries, which did not recur in the latest quarter. The loss of this income contributed materially to the 22% decline in Q3 profit after tax. While this is not an operational weakness, it does make year-on-year comparisons less flattering. Management sought to refocus attention on underlying metrics such as traffic, fares, revenue growth, and flat unit costs to demonstrate that the core business remains robust.

Rising Regulatory and Operating Costs

Ryanair also flagged structural headwinds from rising regulatory and operating costs across Europe. Higher air traffic control (ATC) charges and increasing environmental levies are expected to persist and will partially offset the benefits of fuel hedging and fleet efficiency. These pressures are not unique to Ryanair, but the airline’s low-cost base and scale allow it to absorb or pass on these costs more effectively than many rivals. Nonetheless, they represent a drag on margins and a reason for management’s cautious tone on longer-term cost trends.

Exposure to External and Geopolitical Risks

Management reminded investors that the outlook remains vulnerable to external shocks beyond the airline’s control. Potential geopolitical escalations in regions such as Ukraine and the Middle East, broader macroeconomic volatility, and further European ATC strikes or mismanagement could all disrupt operations and demand, particularly in Q4 and into the next fiscal year. While Ryanair’s strong balance sheet and flexible capacity planning are buffers, these risks underscore the inherent cyclicality and volatility of the airline sector.

CapEx Timing and Industry Capacity Constraints

The company expects FY ’26 capital expenditure to be close to €2.0 billion, slightly lower than the prior €2.2 billion guide, mainly due to timing shifts in aircraft and related investments. A similar CapEx level is anticipated for FY ’27. At an industry level, ongoing delivery delays and engine challenges are constraining short-haul capacity across Europe. For Ryanair, this has led to some route churn and capacity reallocations but also creates an opportunity to gain share and sustain higher fares, as constrained supply supports pricing in key markets.

Forward Guidance: Steady Growth, Strong Cash, and Hedged Costs

Looking ahead, Ryanair’s guidance strikes a balance between confidence and caution. The airline expects FY ’26 traffic of around 208 million passengers, up 4% year-on-year, with full‑year fares now guided to rise about 8–9%. Profit after tax (pre-exceptionals) is forecast in the €2.13–2.23 billion range, supported by flat unit costs, strong fuel hedging (about 84% of Q4 fuel at roughly $76–77 per barrel and 80% of FY ’27 fuel at $67), and locked-in FX at around €1.15. CapEx is expected at roughly €2 billion in FY ’26 and similar in FY ’27, funding a fleet that currently totals 643 aircraft, including 206 Gamechangers (210 after four remaining deliveries). The company is progressing toward FY ’27 traffic of 216 million and reiterates a long-term goal of 300 million passengers by FY ’34, underpinned by 300 MAX 10s on order. Ongoing buybacks and dividends are set against a net cash position of about €1 billion and a trajectory toward an essentially debt-free balance sheet.

In closing, Ryanair’s earnings call underscored a business that remains structurally strong, with rising traffic, higher fares, tight cost control, and a robust balance sheet enabling both aggressive growth plans and substantial shareholder returns. While the decline in quarterly profit, the Italian AGCM fine, and a challenging regulatory and geopolitical backdrop introduce noise and risk, management’s guidance and hedging strategy suggest that these headwinds are manageable. For investors, the story remains one of a low-cost leader poised to use its financial strength and scale to capture outsized gains as European short-haul capacity stays tight and demand continues to normalize.