h&s - I agree that the free seats business distorts the message given to shareholders in terms of load factor, number of pax and average fare. However, I'm curious as to how big a distortion this actually is.
I seem to remember some calculations how much many Ryanair actually makes from - technically - not refunding taxes and fees to no-shows (in most sales, Ryanair does not assume "taxes and fees"). IIRC, it was estimated that the difference between seats sold and passengers flown is up to 10 per cent and much higher than the industry standard. So we are certainly not looking at peanuts.
One other aspect: The contracts with airports / local authorities seem to stipulate a minimum number of annual pax to earn the subsidy (or a certain part of it). So giving away seats to certain destinations actually earns Ryanair money if those passengers with free tickets push the annual pax figure for a destination over the magic threshold.