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<\/p>\nRyanair shares fell today after it said its profit slumped by a third on higher fuel costs and weaker fares in the April-June quarter, while summer fares look set to fall amid consumer nervousness around the Iran war and broader economy.<\/p>\n
The weak results for Ryanair, Europe’s largest airline by passenger numbers, are the latest sign of how the five-month-old Iran war is turning up the pressure on companies as peace talks drag and oil prices remain elevated.<\/p>\n
US forces today hit Iran for a ninth consecutive day as part of an escalating cycle of attacks between the pair after an interim ceasefire agreement signed a month ago unravelled, pushing oil prices back up.<\/p>\n
Ryanair shares had fallen over 7% this morning, but pared its losses to over 4% this afternoon. Rivals Wizz, Lufthansa, Aer Lingus and British Airways’ owner IAG and Air France KLM were also all lower.<\/p>\n
“The price of our 20% unhedged fuel doubled in the quarter and fares fell 6%, primarily we think due to the impact of the Middle East conflict” and the timing of Easter, group chief executive Michael O’Leary said.<\/p>\n
“Despite a recent, slight, uptick in volumes, and less price stimulation, Q2 pricing is trending modestly down year-on-year and the final H1 fare outcome is heavily dependent on the strength of close-in bookings,” Mr O’Leary said, referring to the last-minute reservations that drive profit at budget airlines.<\/p>\n
Ryanair reported after-tax profit of \u20ac538m for its fiscal first quarter to June 30, down 34% from the previous year and short of a forecast of \u20ac579m in a company poll of analysts.<\/p>\n
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Revenues for the three month period rose by 1% from \u20ac4.34 billion to \u20ac4.38 billion.<\/p>\n
Its passenger numbers for the quarter rose by 6% from 57.9 million to 61.3 million and its load factor – how many seats it fills on each flight – was steady at 94%.<\/p>\n
The airline said it was too early to forecast profit for the full year, which would depend heavily on last-minute bookings over the remainder of the summer.<\/p>\n
It said it was better positioned than most rivals because 80% of its fuel requirements to the end of March are hedged at $67 per barrel, compared to recent peaks around $150.<\/p>\n
Chief Financial Officer Neil Sorahan said the airline stepped in to hedge 15% of its fuel needs for the year to the end of March 2028 at $85 per barrel following an interim ceasefire between Iran and the United States that has since unravelled.<\/p>\n
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences<\/a><\/p>\n Weakness in fares is likely to be short-lived, however, as European aviation is facing a wave of consolidation and airlines going bust that will take out capacity, Neil Sorahan said.<\/p>\n “I wouldn’t be surprised to see a number of casualties this winter – there’s a few people very much on the edge,” Sorahan said.<\/p>\n He said he expected “significant capacity” to be cut in Europe this winter, “which could be positive for pricing,” and a lot more may be taken out in summer 2027.<\/p>\n The possible sale of British rival EasyJet<\/a>, which is the subject of a bidding war, could also lead to a reduction in capacity and could trigger a “domino effect” of consolidation in Europe, he added.<\/p>\n