Ryanair improves outlook due to strong demand. Why did the stock fall?

Irish budget air carrier Ryanair has improved its passenger traffic forecast for the current fiscal year amid strong demand and normalization of the Boeing aircraft delivery schedule. A few days ago, the company was in the spotlight due to a public altercation between its management and Elon Musk, which created additional publicity for the brand.

Europe's largest low-cost carrier now expects traffic growth in the current fiscal year 2026 by 4% to almost 208 million people. The figure was previously planned at 207 million passengers. The airline also noted that ticket price growth for the year ending March 31 has accelerated and will exceed the 7% previously forecast in November by "one or two" percentage points.

Ryanair also pointed to an improvement in the situation with fleet deliveries: by the end of February, the airline expects to receive the last four of 210 Boeing 737 MAX 8-200 airplanes. The increased number of seats in the cabin of these airliners will allow to carry 216 million passengers in the next fiscal year, the company expects. Ryanair also expresses "growing confidence" in Boeing's ability to deliver to the European low-cost carrier the first 737 MAX 10 in the spring of 2027, Reuters writes. A total of 300 such aircraft are expected to be delivered by March 2034, Ryanair added.

The carrier's revenue in the third quarter of fiscal 2026 (ended December 31) increased by 9% year-on-year to €3.2 billion, while net profit plummeted by 80% to €30.4 million. The negative impact on the financial result was caused by the cost of making a provision of €85 million for a possible fine in Italy. In late December, the local antitrust regulator (AGCM) fined the low-cost carrier €256 million, accusing it of obstructing the work of travel agencies. Ryanair is confident that it will be able to challenge the decision, The Wall Street Journal reports.

Ryanair updated its expectations days after its CEO Michael O'Leary clashed with Elon Musk over the economics of installing SpaceX's Starlink satellite terminals on its airliners. The altercation, during which O'Leary and Musk called each other "idiots," led to a 2-3% increase in bookings thanks to the media buzz surrounding the airline.

Despite Ryanair's improved outlook, several analysts called it conservative, Bloomberg reports. Shares of the airline after the publication of the quarterly report fell at the opening of trading in Dublin by 2.3% to €28. Since the beginning of 2026, the low-cost carrier's securities have fallen in price by almost 5%, correcting after a 55% rise in 2025.

After the release of the reports, investment bank JPMorgan Chase reiterated a "Buy" recommendation on Ryanair shares with a target price of €38 per unit. Bernstein maintained a Neutral rating and a €28.25 target on the low-cost carrier. According to FactSet, the majority of analysts covering Ryanair - 16 out of 21 - advise them to buy (Buy or Overweight ratings).

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