In this still wary landscape, one airline stands out as the clear exception: Ryanair. See our May 2025 piece "Ryanair stands alone" in which we noted that the Irish carrier is an outlier in the aviation world.
Culture note: Despite the title "Ryanair in the stratosphere," commercial airliners usually fly in the upper troposphere (9 to 12 km altitude), sometimes near the tropopause, which is the boundary with the stratosphere.
The Irish carrier's model is nothing new, but its discipline in execution keeps delivering spectacular results. Point-to-point flights, secondary airports, a homogeneous fleet of 612 Boeing 737s, and unit costs among the industry's lowest: this operational simplicity remains a major competitive advantage. It has enabled Ryanair to become Europe's largest carrier, with more than 200 million passengers carried in fiscal 2025, an all-time record that underscores the strength of demand and the relevance of its positioning.
The trajectory for 2026 looks relatively clear, despite a volatile environment. The target is now set at 207 million passengers, versus 206 million previously, supported by earlier-than-expected Boeing deliveries and strong momentum in the first half. Fares are expected to rise by about 7% for the full year amid constrained capacity and robust demand. Fuel remains a key catalyst: Ryanair has hedged a large share of its needs over two years, protecting margins if energy prices stay contained. If geopolitical conditions ease, air routes shorten, and trade flows normalize, the airline would be among the major beneficiaries.
Recently reported interim results back this up. They broadly matched consensus, with solid operational performance. The interim dividend, however, came in below expectations, down 13.5% y-o-y, despite a 42% rise in net profit. This reflects management's deliberate prudence, prioritizing financial flexibility in an uncertain environment. The assumption of a 25% payout ratio for the full year still stands, with the prospect of a larger distribution at year-end.
Operationally, pricing is the main growth driver. A 13% increase in the average fare in H1, marked by a full pricing recovery in Q2, combined with a 3% rise in ancillary revenues, delivered a 9% increase in revenue per passenger. This explains most of the 13% growth in H1 revenue, despite limited customer growth and a stable load factor.
On the cost side, pressures are well identified. Total operating expenses rose 4%, notably due to a 14% increase in air traffic control fees and higher environmental costs. These were partly offset by effective fuel and dollar hedges, so unit costs rose by only 1%. Ryanair thus remains aligned with its goal of moderate cost inflation, a key pillar of its financial credibility.
However, management remains very cautious. It signals a total lack of visibility for H2 and refrains from giving full-year profit guidance, limiting itself to expecting "reasonable net profit growth." A full recovery of last year's 7% fare decline is not guaranteed, even though it would require only a modest increase in the average fare in H2. Bookings for Q3 are slightly ahead of last year, but the volatile backdrop makes any extrapolation tricky.
Beyond the numbers, Ryanair continues to benefit from supportive structural trends, particularly in some lagging markets. Germany is a case in point. The low-cost market there has not yet returned to its pre-crisis level, with a share of about 26% of total capacity, versus a European average of 36%. The number of weekly low-cost flights in summer 2025 remains 34% below 2019. The shift in capacity to secondary airports, where low-cost sometimes exceeds 90% of flights, is precisely the Irish carrier's historic playing field.
Have investors already missed the plane? Partly, no doubt. The share price already reflects much of the operational recovery. But looking to 2026, and with capacity targets maintained at 215 million passengers for fiscal 2027 and 300 million by 2034, getting on board still looks like a long-term strategic decision rather than a speculative bet. In an airline industry that remains contested, Ryanair continues to stand apart.
