Ryanair’s profit dropped by more than a third in the first quarter as jet fuel prices surged due to the conflict in the Middle East. The budget airline posted a 36% decline in pre-tax profit to €593 million for the three months ending in June.
The carrier had secured 80% of its fuel needs for the current financial year at $67 per barrel, providing some protection against price spikes. The remaining 20%, however, saw costs more than double to $150 per barrel. That increase contributed to operating costs rising 11% to €3.8bn, despite a 6% rise in passenger numbers.
Fares slip as travelers book later
Revenue edged down 1% to €4.3 billion, as lower ticket prices did not fully offset higher costs. Chief executive Michael O’Leary blamed the pricing pressure on consumer caution tied to the Middle East conflict, economic instability, and fears of fuel shortages across Europe.
O’Leary told investors that while passenger volumes had recently improved, second-quarter fares were still slightly below last year’s levels. He added that the final half-year results would depend on last-minute bookings in August and September.
Airlines have warned that fears over travel disruption caused by the Iran war are causing holidaymakers to book at last-minute, hampering the ability of carriers to plan ahead. Ryanair said its “conservative” jet fuel hedging policy still leaves it better protected than its EU competitors.
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Fuel costs set to rise further
The airline’s hedging coverage drops next year, with only 15% of its 2028 fuel needs locked in at $85 per barrel.
Stockbroker Panmure Liberum said Ryanair’s update will be viewed as “slightly disappointing” by the market. Shares fell 5.7% on the Euronext Dublin and Nasdaq, closing at €24 and $63.
In June, the board extended O’Leary’s contract by six years, with an option for 10 million additional shares. Chairman Stan McCarthy said he is “pleased to report” that O’Leary has agreed to extending his leadership “for the benefit of all shareholders.”
O’Leary has run Ryanair for decades and is known for his outspoken style.
For now, Ryanair’s focus stays on managing expenses while handling an unpredictable market.
