Demand slows for budget airlines – is it a good time to invest?
Budget airlines easyJet and Ryanair are in for a bumpier ride now that demand among consumers seems to be slowing


Shares in easyJet fell by 7% last week after the budget airline posted a first-half loss that was slightly larger than expected, and announced the departure of CEO Johan Lundgren, says Karen Gilchrist on CNBC. Pre-tax losses came in at £350m for the six months to 31 March 2024.
Lundgren claims that the company has “positive momentum” coming into the summer travel season, with consumers still inclined to spend on holidays, “particularly to classic European destinations such as Spain, Portugal and Turkey”. The fact that Lundgren is being replaced at the top by finance boss Kenton Jarvis implies “a smooth passing of the baton and no change to corporate strategy”, says AJ Bell’s Russ Mould.
Combined with the management’s confidence that the company is on track to meet its medium-term target of annual pre-tax profits of £1bn, the news should have been “reassuring”. But in this case it was “just not enough to please the market”, with the negative reaction from shareholders suggesting that the status quo was exactly what they didn’t want. They were clearly hoping an outsider would come in and “shake things up”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Which budget airlines are taking a hit?
It’s easy to understand investors’ mixed feelings about Lundgren and his team, says Lex, the investment column in the Financial Times. His time at the top was “rarely without drama”. EasyJet had to raise equity twice to get through the pandemic, while he faced questions over his strategy, including whether he “should have been more aggressive in a grab for market share post-pandemic”.
Still, Lundgren deserves credit for leaving easyJet in a “robust state”. It should also “avoid the worst of the snarl-up in aeroplane deliveries that will constrain capacity in the next few years”, and should support higher ticket prices.
EasyJet is not the only airline experiencing pockets of turbulence.
Shares in rival Ryanair have fallen back from €21 (£18) last month to around €18 (£15), says Alistair Osborne in The Times. The fall comes after Ryanair admitted that it now thinks summer fares are going to be “softer” than either Michael O’Leary or the market previously expected. Ryanair is also set to suffer from more aircraft delivery delays from Boeing, which could prove costly given that the airline has already hired extra crew members. It seems that customers’ “insatiable demand” for flights is finally cooling, says Hargreaves Lansdown’s Susannah Streeter.
While consumers have been “ring-fencing budgets to satisfy their wanderlust”, there are now signs that many more are “starting to baulk at higher prices”, with flight prices having risen by a fifth over the past year. And “recessionary winds” around Europe, with economies set to remain “highly sluggish” this year, mean that people may remain “cautious”. Still, a bout of “washout weather in key markets” may still prompt spurts of seat-buying to sunnier destinations.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
-
New Chase bonus deal takes savings rate to 4.75% – is it worth it?
Chase’s latest savings deal propels it into first place in the best-buy tables, but there are some pitfalls to look out for
By Katie Williams Published
-
Review: Trasierra – a yoga retreat in the Spanish hills
Flora Connell joins a yoga retreat at Trasierra, in the Sierra Morena mountains north of Seville
By Flora Connell Published
-
Why CEOs deserve a pay rise
Opinion The CEOs of big companies often come under fire for being grossly overpaid. But the truth, as per some economists, is the opposite. Do they merit a pay rise?
By Stuart Watkins Published
-
Rolls-Royce stock jumps 15% – could it climb further?
Aircraft-engine group Rolls-Royce’s CEO has been hailed as a hero for spearheading the firm’s recovery. And the future looks bright, says Matthew Partridge
By Dr Matthew Partridge Published
-
The power of private markets
Interview Helen Steers, co-manager of the Pantheon International investment trust, tells MoneyWeek about the vast array of compelling opportunities in private equity
By Andrew Van Sickle Published
-
Vertex Pharmaceuticals is an uncommon opportunity in rare diseases
Vertex Pharmaceuticals operates in a profitable subsector and is poised for further success
By Dr Mike Tubbs Published
-
Global investors have overlooked these top tips in emerging markets
Opinion Chris Tennant, co-portfolio manager of Fidelity Emerging Markets, picks three attractive companies in emerging markets
By Chris Tennant Published
-
King Coal has not been dethroned yet — should you buy?
The demand for coal is only growing, yet investors don’t seem to want to take advantage of the opportunity, says Rupert Hargreaves
By Rupert Hargreaves Published
-
It’s time to start buying Europe again, says Merryn Somerset Webb
Opinion Europe's stocks are cheap and the economic backdrop is starting to look cheerier, says Merryn Somerset Webb
By Merryn Somerset Webb Published
-
Prosus to buy Just Eat for €4.1 billion as takeaway boom fades
Food-delivery platform Just Eat has been gobbled up by a Dutch rival. Now there could be further consolidation in the sector
By Dr Matthew Partridge Published