In a time when airlines are suffering from unprecedented travel restrictions, Ryanair remains confident that the European air travel industry will recover by summer. They reported record losses of €321M this quarter and warned it could show losses of up to €950M for the year.

Despite this, Ryanair stocks (RYA.L) have already rallied to pre-pandemic levels and have the potential to rise further. CEO Michael O’Leary has outlined an aggressive strategy where they have ordered 210 new Boeing 737 aircraft for delivery over the next 5 years and plan to increase their presence at airports around Europe. They will compete, as expected, by offering a lower fare alternative over other airlines running the same routes and expect to capitalise on the release of suppressed demand for travel once restrictions are lifted.

This strategy, while potentially profitable, has one very obvious major drawback. It depends heavily on the lifting of travel restrictions by summer months within Europe and the rise in passenger numbers thereafter. With vaccine production and distribution in the EU lagging behind that of other developed economies and the emergence of new COVID variants posing a threat, it is a possibility that there may be another lockdown summer. In which case, Ryanair would be in a weak position having spent aggressively in anticipation of an unrealised expected demand.