Ryanair: A Contrarian’s Gem in the Airline Sector’s Rough

The airline sector has been a battleground for investors in 2025, with U.S. carriers slashing forecasts amid economic uncertainty and geopolitical noise. Yet, amid the chaos, Ryanair (RYAAY) stands out as a contrarian opportunity. Despite facing its own headwinds—from Boeing delays to inflation—this European low-cost carrier is positioned to rebound sharply, leveraging a partial fare recovery, operational resilience, and a CEO’s share-price-linked bonus that could catalyze a surge in investor confidence. At €22.41, shares are undervalued, offering a tactical entry point ahead of FY26’s earnings turnaround. Let’s unpack why now is the time to buy.

Fare Recovery and Traffic Growth: The Foundation of Resilience

Ryanair’s FY25 (ended March 2025) saw a 7% average fare decline to €46 per passenger, driven by inflationary pressures and a drop in online travel agency bookings. Yet, traffic soared to a record 200 million passengers (+9% YoY), pushing revenue to €13.95 billion. The key takeaway? Ryanair’s model thrives on volume.

Now, the tide is turning. Q1 FY26 fares are “on track to finish a mid- to high-teen percentage ahead of Q1 FY25,” according to management. Easter 2025 bookings, fully in April, and weak prior-year comparables are fueling momentum. While full-year fare recovery may not fully offset 2024’s dip, CEO Michael O’Leary’s cautious optimism—“recoup most, but not all”—is prudent. Crucially, summer demand is surging, with Ryanair’s peak season yields critical to FY26’s bottom line.

Strategic Leverage: The CEO’s €21 Price Target

O’Leary’s €100 million bonus hinges on Ryanair’s shares staying above €21 for 28 consecutive days—or hitting €2.2 billion in annual profit. Shares flirted with €21 in early 2025 but dipped below it in April. However, the current price of €22.41 is within striking distance of the trigger.

This isn’t just about O’Leary’s wallet. The structure creates a self-fulfilling prophecy: management’s incentives align with shareholders. Analysts at Barclays note Ryanair could accelerate share buybacks or operational efficiencies to hit the target. Meanwhile, the stock’s 85% fuel hedging at $76/barrel (vs. $79 in FY25) reduces cost risks, freeing capital for growth.

Undervalued Passenger Growth: 206 Million and Beyond

Ryanair’s FY26 passenger target is 206 million (+3% vs. FY25), achievable despite Boeing’s delayed 737 MAX deliveries. CFO Neil Sorahan remains confident, citing 4/9 of targeted aircraft already delivered. Even more compelling is the ancillary revenue engine: FY25’s €4.72 billion in non-ticket sales (up 10%) signals a diversified revenue stream.

Critics cite capacity constraints, but O’Leary’s “aggressive” FY27 aircraft plan hints at a post-delay rebound. Add to this Ryanair’s foray into Ukraine—a post-war market with 5 million passenger potential—and you have a playbook for sustained growth.

Tactical Entry Now: Why €22.41 is the Sweet Spot

Ryanair’s stock has rebounded from 12-month lows near €19.50, but remains below analysts’ €26.50 target. The technical picture is bullish: resistance at €22.50 has been broken, with support at €20.50. Meanwhile, the CEO’s bonus mechanism and Goldman Sachs’ upgraded price target (€26.50 from €25) suggest a catalyst-driven rally ahead.

Risks? Yes, But Manageable

• Boeing Delays: While aircraft shortages capped FY26 growth, accelerated deliveries in FY27 could offset this.
• Macroeconomic Shocks: Ryanair’s price-sensitive model is vulnerable to recession, but its €76/barrel fuel hedge and low-cost structure mitigate this.
• Governance Concerns: Non-EU shareholders’ voting rights post-Brexit are a minor issue, outweighed by the stock’s inclusion in global indices post-2025 reforms.

Conclusion: Buy Now, Reap Later

Ryanair is a contrarian’s dream: a high-quality asset trading at a discount, with a CEO incentivized to lift the stock and a summer demand surge on the horizon. At €22.41, shares offer a low-risk upside—especially if fares stabilize near current Q1 levels. Investors should act now, before the market catches on to Ryanair’s hidden strengths. The €21 bonus target is a ceiling, but the real prize is the €26.50 analyst target—and beyond.

Action Item: Accumulate Ryanair shares at current levels. Set a stop-loss below €20.50 and target the €26.50 milestone. The skies are clearing for this European aviation giant.