Musk “Endorsement” of Ryanair Just a Gimmick? Investors Actually More Worried About Musk’s Focus on Tesla.

TradingKey - On January 14 local time, Michael O'Leary, CEO of Ryanair (RYAAY), stated that due to concerns regarding increased drag and the resulting rise in fuel costs, the company will not install Starlink satellite Wi-Fi technology, developed by Elon Musk's SpaceX, on its aircraft.

Musk responded on social media platform X, calling O'Leary "clueless" and adding that Ryanair cannot even accurately measure changes in fuel consumption. This sparked a war of words between the two on X, with Musk even suggesting an interest in acquiring Ryanair.

As the situation continued to unfold on X, Ryanair capitalized on the momentum by launching a "Total Moron" promotional fare sale, which boosted ticket sales for the low-cost carrier. Its stock price also saw a slight uptick following the acquisition talk. Michael O'Leary remarked, "Quarreling with Elon Musk is great for our business," and added that he would welcome investment from Musk.

This seemingly emotional public spat actually conceals a sophisticated business strategy. O'Leary's "confrontational marketing" not only successfully leveraged free traffic but also precisely reinforced Ryanair's brand positioning—while Musk, in a sense, became his most expensive "brand ambassador."

Why is installing Starlink service impractical for Ryanair?

Ryanair is one of Europe's largest and most well-known low-cost carriers, famous for its ultra-low fares and extensive European route network, operating on an ultra-low-cost model. It controls costs through strategies such as using secondary airports, direct sales, and a single aircraft type, making it highly popular among budget-conscious travelers.

According to rough estimates, the installation costs of Starlink and the increased operating expenses due to added drag would total between $200 million and $250 million annually. Simply passing these costs onto consumers could result in a significant loss of customers.

Even as an optional value-added service, Ryanair's customer base is unlikely to "foot the bill." Most Ryanair passengers prioritize low cost and value for money, making it impractical for them to spend extra on a temporary Wi-Fi service.

What impact would an acquisition of Ryanair by Musk have on Tesla?

First, investors believe the most direct impact would be on Tesla.

If Musk were to acquire Ryanair, the market's most immediate concern would not be the deal itself, but the further diversion of Musk's attention and management focus.

Although Ryanair, as Europe's largest low-cost airline, boasts strong cash flow and operational efficiency, and could theoretically create synergies with Tesla's energy, autonomous driving, or future urban air mobility concepts (such as Optimus or flying cars), this "strategic imagination" is unlikely to materialize in the short term.

Most importantly, Tesla is currently at a critical window for technological transformation: FSD (Full Self-Driving) has yet to achieve large-scale profitability, and its energy storage business is in a high-growth phase. At this stage, the market is highly sensitive to Musk's "presence"—whether he is personally involved in product definition, engineering decisions, and crisis management is seen as a key factor in Tesla's valuation.

Looking back at Musk's deep involvement during the Twitter acquisition, Tesla's stock price plummeted by over 60%; even after he gradually stepped back from daily operations, it took nearly two years to rebuild trust. If he were to venture into the aviation industry now, investors would inevitably face renewed doubts.

Even if an acquisition of Ryanair were financially feasible and generated short-term buzz, the net impact on Tesla's stock price would likely be negative, unless Musk could provide a clear commitment not to diminish his governance role at Tesla or establish a robust succession management mechanism.

Furthermore, a Musk acquisition of Ryanair is theoretically difficult to achieve due to European Union regulations, which stipulate that non-EU citizens cannot hold a majority stake in European airlines.

In fact, the market is not opposed to Musk's expansion, but it objects to him fighting "on multiple fronts" before Tesla has completed its critical transition; Musk's stability remains the anchor for Tesla's valuation.