Key facts
- Ryanair's pre-tax profit dropped 36% to €593m in the three months to June.
- Operating costs rose 11% to €3.8bn due to a doubling of unhedged jet fuel costs.
- Revenue slipped 1% to €4.3bn as lower fares impacted earnings.
- The airline has 80% of its fuel needs hedged for the current financial year at $67 per barrel.
- Michael O'Leary's contract as CEO was extended for six years.
Ryanair experienced a 36% decline in pre-tax profit, falling to €593m in the first quarter, as the airline grappled with significantly higher jet fuel costs. The budget carrier reported that the 20% of its jet fuel that was not hedged more than doubled in price to $150 per barrel, contributing to an 11% increase in operating costs to €3.8bn.
Despite a 6% rise in traffic, Ryanair's revenue slipped by 1% to €4.3bn due to lower fares. Chief executive Michael O'Leary attributed this to consumer hesitancy stemming from the Middle East conflict, concerns over EU jet-fuel shortages, economic uncertainty, and later bookings. He noted that second-quarter pricing is trending modestly down year-on-year, with the final first-half fare outcome dependent on late August and September bookings.
The airline stated that its "conservative" jet fuel hedging policy, which covers 80% of its needs for the current financial year at $67 per barrel, still provides better protection than many EU competitors. However, energy costs are expected to rise next year, with 15% of its 2028 financial year requirement hedged at $85 per barrel.
Stockbroker Panmure Liberum described the update as "slightly disappointing" given that Ryanair's profit missed analyst expectations. In a separate development, Michael O'Leary had his contract as CEO extended for six years, a move supported by Ryanair chairman Stan McCarthy for the benefit of shareholders. Shares in Ryanair fell 5.7% on both Euronext Dublin and the Nasdaq.