Ryanair has reported a sharp decline in quarterly profits after escalating conflict in the Middle East pushed up jet fuel prices and prompted travellers to delay booking flights, forcing Europe’s largest low-cost airline to cut fares.
The Irish carrier said pre-tax profit fell 34 per cent to €593 million in the three months to June, despite carrying more passengers, as higher operating costs and weaker pricing weighed on earnings.
Revenue edged up just 1 per cent to €4.4 billion during the quarter, while passenger traffic increased by 6%, helped by the Easter holiday.
However, average fares declined 6 per cent as Ryanair reduced ticket prices to stimulate demand amid growing uncertainty over international travel.
The airline said customers have become increasingly cautious about booking holidays, with many waiting until closer to departure before making travel plans.
Ryanair blamed much of the earnings decline on soaring jet fuel prices following the escalation of hostilities involving Iran, Israel and the United States.
The conflict has disrupted global energy markets, with crude oil briefly climbing to $90 per barrel after renewed fighting and concerns over shipping through the strategically important Strait of Hormuz, a key route for global oil exports.
Although Ryanair has hedged a significant portion of its fuel purchases through forward contracts, the airline said the cost of fuel not covered by those agreements has more than doubled.
Ryanair cautioned that its financial performance for the rest of the year will remain vulnerable to geopolitical developments.
The airline said its outlook depends heavily on:
- Further escalation of conflicts in the Middle East and Ukraine;
- Future movements in oil and jet fuel prices;
- Consumer confidence and travel demand.
It also expects summer airfares between July and September to remain slightly below last year’s levels, reflecting continued caution among travellers.
Despite softer demand overall, Ryanair said its popular Mediterranean destinations continue to attract strong passenger numbers.
Chief Financial Officer Neil Sorahan said customers remain eager to travel but are delaying booking decisions. “People are as keen to get away as ever, albeit booking just a little bit later.”
Ryanair shares fell 5 per cent following the results, reflecting investor concerns over rising fuel costs and uncertainty surrounding the global travel market.
Russ Mould, Investment Director at AJ Bell, said Ryanair remains better positioned than many competitors because of its low-cost model but warned that geopolitical risks have made forecasting increasingly difficult.
He noted that without a lasting resolution to the Middle East conflict, airlines are likely to face continued pressure from volatile fuel prices and uncertain consumer demand.
While Ryanair continues to benefit from robust passenger growth and a strong network across Europe, the airline expects external factors beyond its control to dominate performance in the months ahead.
With fuel prices remaining volatile and geopolitical tensions showing little sign of easing, Europe’s biggest budget airline faces the prospect of another challenging period despite sustained demand for leisure travel.
