Ryanair Profits Drop 34% Amid Rising Fuel Costs

Ryanair Holdings reported a 34% decrease in after-tax profit for the first quarter ending June 30, falling to €538 million from €820 million the previous year. The result missed analyst forecasts of €579 million, causing shares to drop over 5% on the Nasdaq. While passenger traffic grew 6% to 61.3 million and revenue rose slightly to €4.38 billion, operating costs climbed 11% to €3.81 billion.

Chief Executive Michael O'Leary attributed the profit slide and a 6% drop in average fares to consumer hesitancy and economic uncertainty stemming from conflict in the Middle East. Specifically, the airline cited February strikes by the United States and Israel against Iran, which contributed to the price of Ryanair's 20% unhedged jet fuel more than doubling to $150 per barrel. O'Leary warned that summer fares are trending lower than last year and that results remain sensitive to escalation in Ukraine, the Middle East, and air traffic control strikes.

Despite these headwinds, the company became debt-free after a €1.2 billion bond repayment in May and expanded its network with 130 new routes and three new bases in Rabat, Tirana, and Trapani. Chief Financial Officer Neil Sorahan expects the current pricing weakness to be short-lived, predicting that a wave of airline failures and consolidation in Europe through summer 2027 will reduce capacity and eventually boost pricing.