Ryanair reported a sharp fall in profits during the first quarter of its financial year as rising fuel costs and uncertainty caused by the conflict in the Middle East affected travel demand. The airline said many passengers waited longer than usual to book flights, forcing it to reduce ticket prices to encourage more bookings.
Profits Decline Despite Stable Revenue
The airline’s pre tax profit fell by 34% to €593 million during the April to June period. Revenue increased slightly by 1% to €4.4 billion, showing that sales remained stable even though earnings dropped.
Passenger numbers increased by 6% during the quarter, helped by the Easter holiday travel season. However, average ticket prices fell by 6% because Ryanair introduced lower fares to attract travelers who were hesitant to book flights.
Rising Fuel Costs Increase Pressure
Fuel prices increased significantly after tensions between the United States, Israel, and Iran disrupted global energy markets. Although Ryanair secured prices for much of its fuel through hedging agreements, the airline still paid much higher prices for fuel that was not covered by those contracts.
Oil prices also rose after renewed fighting in the region interrupted shipping through the Strait of Hormuz, one of the world’s most important oil transport routes. Energy prices eased briefly after a temporary peace agreement but climbed again when negotiations failed and the conflict resumed.
Travelers Wait Longer Before Booking
Ryanair said customers remain interested in summer holidays, especially on popular Mediterranean routes. However, many travelers are making booking decisions much closer to their departure dates.
Chief Financial Officer Neil Sorahan said demand for holiday destinations remains strong, but customers are taking more time before confirming their travel plans.
The airline expects summer fares between July and September to remain slightly below last year’s levels as it continues to encourage bookings with competitive pricing.
Ongoing Risks Could Affect Future Results
Ryanair warned that its financial performance for the rest of the year will depend on several external factors. These include further escalation of conflicts in the Middle East and Ukraine, along with changes in oil prices and jet fuel costs.
Following the earnings announcement, Ryanair’s share price fell by 5%. Market analysts believe the airline remains stronger than many competitors, but they also warned that ongoing geopolitical tensions make the outlook uncertain for the aviation industry.
