Ryanair reported a sharp decline in quarterly profits after rising jet fuel prices and weaker customer demand, linked to ongoing conflict in the Middle East, weighed on the airline’s financial performance during the opening months of its financial year.
The Irish low-cost carrier said pre-tax profit fell 34 percent to €593 million (£503 million) in the three months from April to June. Revenue edged up by just 1 percent to €4.4 billion as the airline lowered ticket prices to encourage bookings amid growing uncertainty among travellers.
Passenger numbers increased by 6 percent to 6.1 million during the quarter, supported in part by the Easter holiday falling in April. Despite carrying more passengers, average fares dropped by 6 percent as Ryanair sought to attract customers who were delaying travel plans because of geopolitical tensions.
The airline said demand remains strong for popular Mediterranean destinations, although many passengers are booking flights closer to departure than in previous years.
Finance chief Neil Sorahan said travellers still want to take holidays despite the uncertainty.
“People are as keen to get away as ever, albeit booking just a little bit later,” he said.
Fuel costs have become a major challenge following military action involving the United States, Israel and Iran. Ryanair said the price of jet fuel outside its existing hedging agreements has more than doubled since the conflict intensified earlier this year.
The company has protected a large portion of its fuel needs through hedging contracts agreed in advance, helping reduce the impact of market volatility. However, fuel purchased outside those agreements has become significantly more expensive.
Oil markets have remained volatile in recent weeks. Crude oil prices briefly climbed above $90 per barrel on Monday after renewed military exchanges between the United States and Iran raised concerns over supplies moving through the Strait of Hormuz, one of the world’s most important oil shipping routes.
Although a temporary ceasefire last month eased pressure on energy markets, oil prices have risen again after negotiations broke down and hostilities resumed.
Ryanair warned that its financial performance for the rest of the year remains highly dependent on external events, including developments in the Middle East, the war in Ukraine and movements in unhedged jet fuel prices.
The airline also expects fares during the peak July-to-September travel season to remain slightly below last year’s levels as consumers continue to book later than usual.
Investors reacted cautiously to the results, with Ryanair shares falling around 5 percent on Monday.
Russ Mould, investment director at AJ Bell, said Ryanair remains in a stronger financial position than many competitors but faces an increasingly uncertain operating environment.
He said renewed conflict in the Middle East adds pressure to the aviation industry and warned that, without a lasting resolution, airlines are likely to continue facing difficult trading conditions in the months ahead.
