Irish low-cost airline Ryanair has soared out of the coronavirus storm. Record passenger numbers, a major aircraft purchase agreement with Boeing, and significant investment pledges are providing the company with foundations for further growth.

Traffic in August 2023 broke company records, with Ryanair carrying 18.9 million passengers. This was achieved despite the computer failure at National Air Traffic Services (NATS) in the UK, which led 350 Ryanair flights to be cancelled.

Ryanair made its biggest purchase agreement in history with Boeing in May 2023, with the order including 150 narrow-bodied 737-10 jets, and an option for another 150. The company also announced 11 foreign direct investment (FDI) projects between January and August 2023 — just two projects short of its record full-year total in 2016, according to greenfield investment monitor fDi Markets. 

A key part of Ryanair’s FDI activity in 2023 is a $3bn plan for Ukraine, revealed in July. Once the war with Russia is over, Ryanair plans to establish operations at Kyiv Boryspil, Lviv and Odesa airports, and aims to begin flights within six weeks of Ukrainian airspace reopening.

Michael O’Leary, chief executive of Ryanair, sat down with fDi to discuss the company’s “bright” growth outlook for European travel and the reasoning behind its major Ukraine investment plans.

Q: What is your outlook for Europe’s travel and aviation industry as it undergoes restructuring and recovery from the coronavirus pandemic?

A: The Covid pandemic has probably accelerated the restructuring of European air travel quite significantly. A lot of competitors disappeared, like Flybe and Monarch. Currently the Ryanair fleet is about 560 aircraft. We have orders in place with Boeing to take delivery of another 390 aircraft over the next decade [between outstanding orders and new orders]. 

We think the future for Ryanair’s growth across Europe is very bright because so many airports are desperately struggling to recover their pre-Covid traffic because of these capacity cutbacks and airline failures. We are expanding heavily at the moment, obviously in the UK, Spain and Italy, but also in central and eastern Europe, where we’re the biggest airline in places like Poland, Bulgaria and the Baltic states. In the upcoming winter, we’re already taking delivery of 57 new aircraft from Boeing in Europe costing about $100m each. So we’re putting another $5.7bn [into] new aircraft.

Q: Those are big capital expenditure plans. What’s giving you the confidence to invest?

A: We see so much growth out there. We went into Covid back in 2019 carrying 149 million passengers and this year, ending in April 2024, we’re going to carry about 183 million passengers. So there’s huge, strong demand out there in Europe. I think people felt locked up for two years during Covid. Families want to go on holidays, and particularly at the moment; we’ve had such a terrible summer with rain in the UK, Ireland and northern Europe. Everybody wants to get to the beaches in September and October now that the kids have all gone back to school. 

We have such a constant price advantage over every other airline, with low fares for the next five to 10 years. That’s what gives us the confidence to go and place these large aircraft orders, and make large bets on capacity. And so far, for the last 15 or 20 years, we’ve been proven reasonably right.

Q: Central and eastern Europe (CEE) is a key part of your growth plans. How do you view competition there?

A: EasyJet are not very present in central and eastern Europe and Wizz Air are generally confining their operations to Paris and Gatwick. If you look at Wizz in central and eastern Europe, that’s where they started off. But they’re taking more and more of the capacity and putting it in the Middle East, where they’re expanding their fleet and trying to withdraw capacity from central and eastern Europe. We really don’t have that much competition even in those markets. In fact, in a lot of those markets we are already the incumbent carrier.

There’s enormous growth in the [CEE] marketplace — most of their airlines don’t have spare aircraft [and] aren’t investing in new aircraft capacity. We have a lot of growth capacity coming into a market where there is above-average growth and demand for growth, and we’re feeding that demand. There is a bigger gap in the market in Italy, where Alitalia has reduced its fleet by 50%.

Q: What is the reasoning behind your $3bn investment pledge to Ukraine?

A: The skies over Ukraine are closed to civil aviation at the moment because it’s not safe. We’re reasonably confident that the Ukrainians will defeat the Russians and the Russians will withdraw from Ukraine, at which point in time we believe the skies over Ukraine will reopen to civilian aviation. There will be an enormous demand for air travel to and from ... Ukraine as they rebuild the economy. 

A lot of the road and rail infrastructure has been destroyed in Ukraine. Some of the airport infrastructure has been destroyed as well, particularly over the eastern side of the country, in places like Kharkiv. But in Kyiv and Odesa airports are all still functional, although they have no flights. And if you take Ukraine’s population [of] about 40 million people pre-war, about 10 million of those, about a quarter of the population, have been dispersed across Europe, mainly women and children fleeing the war. The men were not allowed to leave. And so we think as soon as the skies reopen, there’s going to be enormous demand for those Ukrainian families to travel to and from Ukraine to reunite with one another. 

Q: What is the timeline of your investment into Ukraine?

A: I think there’s going to be very significant European investment into Ukraine to rebuild the infrastructure and rebuild the economy. 

We were Ukraine’s second largest airline before the war started. We went to Ukraine in July and met with the government and the main airport — the infrastructure has all been preserved and maintained its value. They’re running to maintain the airports in a ready-to-go kind of fashion. We want a low cost base at the Ukrainian airports. 

We will commit $3bn-worth of aircraft to be based permanently in Ukraine. We’re willing to compete on the 10 aircraft in Kyiv, the capital city, worth $1bn; 10 aircraft will be based in Lviv for another $1bn; and another 10 aircraft in Odesa as well. It would involve us hiring about 1000 pilots and cabin crew, and all that will be done within a two-to-five-year period after reopening. But we’ve also committed that once the skies are declared open, we’ll have about 25 of our aircraft that were already based in other European countries like Romania, Italy, the UK and Ireland ready to fly there.

We will launch about 600 weekly flights back into Kyiv within six weeks of Ukraine reopening. We are one of the only airlines that have that size of scale and the ability to be able to commit that volume. We want to charge back into Ukraine to get the economy and tourism back up and moving.

Q: Besides families looking to return home, what type of passengers do you expect to be going into Ukraine after the war ends?

A: Besides families looking to return home, we expect three large areas of traffic growth into Ukraine once they reopen the skies. The first will be visiting friends and relatives (VFR) traffic where Ukrainians abroad will be travelling home to visit families, and equally Ukrainians will be travelling abroad to visit family members who, due to the war, have moved and settled somewhere else in Europe. 

The second large area of growth we believe will be redevelopment and reconstruction. We believe the EU, the US and other Nato allies will invest heavily in the rebuilding and reconstruction of Ukraine once the war is over. Again, we believe this will give rise to a lot of business traffic looking for access to and from Ukraine. The third group will be large numbers of EU citizens who will be keen to visit the cities of Kyiv, Lviv and Odesa now that they have heard so much about these cities and the country as a result of the Russian invasion. We believe Ukraine will become a major tourism destination if Ryanair can create a lot of low-fare capacity to serve Ukraine’s recovery. 

Q: What is your outlook for the future of aviation, given climate change and the need to reduce carbon emissions?

A: We believe there is an exciting future for aviation as incomes rise and people have more leisure time. They will continue to fly — for work, for leisure and to visit friends and families, but will want to fly with airlines who are investing in new aircraft, such as the Boeing MAX10 fleet, which carries more passengers but radically reduces fuel consumption, carbon and noise emissions. Air travel will continue to grow, as long as we can keep airfares low, while at the same time reducing the impact of flying on our environment.

This interview has been edited for brevity and clarity.

This article first appeared in the October/November 2023 print edition of fDi Intelligence