Ryanair: A Tactical Buy as Fare Pressures Ease and CEO Incentives Signal Upside

Ryanair’s recent profit decline has sparked investor caution, but beneath the surface lies a compelling story of demand resilience, strategic execution, and a management team with skin in the game. With summer bookings surging, Boeing delays nearing resolution, and a CEO’s €100m bonus hinging on sustained share price gains, now is the time to position for a rebound.

Fare Pressures Are Transitory—Demand Remains Strong

Ryanair’s 16% profit drop in FY2025 was largely due to a 7% year-over-year decline in average fares, driven by post-pandemic pricing adjustments and aggressive discounting to clear capacity. However, the company’s Q1 2026 results reveal a critical shift: average fares are now “mid to high teen percent ahead” of 2024 levels, with Easter bookings hitting record highs. This improvement stems not from reduced demand but from better pricing discipline and a stronger demand backdrop.

Crucially, passenger traffic grew by 9% to a record 200 million in FY2025, underscoring that Ryanair’s customer base is expanding, not shrinking. CEO Michael O’Leary emphasized, “This isn’t a demand issue—it’s a fare recovery race.” With summer 2025 bookings already “robust” and peak fares trending moderately higher, the stage is set for a profit rebound in FY2026.

Summer 2025: The Catalyst for FY2026 Profit Growth

Ryanair’s summer 2025 demand is “strong” across all regions, with forward bookings outpacing 2024’s weak comparables. Easter’s full booking cycle (vs. last year’s truncated demand) has already boosted near-term revenue. While final fare outcomes hinge on peak summer yields, O’Leary’s confidence is palpable: “We’re seeing pricing power returning.”

The company’s 3% traffic growth forecast for FY2026—despite Boeing’s delayed aircraft deliveries—reflects constrained capacity, not lack of demand. With 181 of 210 Boeing 737-8 MAX planes delivered, Ryanair expects the remaining 29 to arrive before summer 2026, unlocking 20% more seats per aircraft via the MAX 10 variant by 2027. This fleet upgrade, paired with 85% fuel hedging at $76/barrel, creates a cost-efficient path to profit recovery.

CEO’s €100m Bonus: Skin in the Game for Shareholders

O’Leary’s potential windfall—€100m if Ryanair’s share price stays above €21 for 28 days—has drawn scrutiny. Yet this incentive is a masterstroke of alignment: Ryanair’s stock closed at €20.75 in March 2025, nearing the trigger, and analysts project a 12-month target of €24. With O’Leary’s personal stake worth €907m, his success is directly tied to shareholder gains.

This structure removes doubt about management’s commitment. As O’Leary quipped, “I’m not getting a bonus unless you do.” The fact that the €21 threshold has already been breached multiple times in 2025 suggests the payout is all but inevitable—a stark contrast to CEOs who earn bonuses regardless of performance.

Boeing’s Resolution: A Clear Path to Capacity Growth

While Boeing delays have capped traffic growth at 3% in FY2026, the bottleneck is temporary. Ryanair’s MAX 10 order (200+ aircraft) promises 20% better fuel efficiency and 20% more seats, enabling a return to 5-7% annual traffic growth by FY2027. This fleet modernization, combined with €3.9bn in cash reserves, positions Ryanair to dominate Europe’s low-cost carrier market.

Risk-Reward Asymmetry: Buy Now, Reap Later

The risks—Boeing delays, fuel spikes, or macroeconomic slowdowns—are priced into Ryanair’s current valuation. At a market cap of €18bn, the stock trades at just 9x its FY2025 earnings (€2.05bn), offering fat margins of safety. Meanwhile, the rewards are asymmetric:
- Upside: A €24 share price (analysts’ target) would deliver 16% gains from current levels.
- Downside: Even a €15 share price—unlikely given the balance sheet’s strength—leaves room for recovery.

For contrarian investors, the timing is perfect: near-term catalysts (summer fares, Boeing deliveries) are priced in, but long-term growth (MAX 10, route optimization) is not.

Conclusion: Act Now Before the Rebound

Ryanair is at an inflection point. With fare pressures easing, summer demand firing on all cylinders, and management’s incentives perfectly aligned, this is a rare moment to buy a European travel giant at a discount. The CEO’s bonus isn’t just a gimmick—it’s a bet on Ryanair’s ability to dominate post-pandemic skies. For investors willing to look past short-term noise, the reward is clear: buy now, and watch the €21 barrier become the floor for a much higher ceiling.

The time to act is now—before the crowd catches on.