Net profit at Ryanair, Europe's largest low-cost carrier (LCC), fell by more than 30%. International oil prices surged due to the military clash between the United States, Israel, and Iran, while average airfares declined, worsening results.
According to Reuters on the 20th (local time), Ryanair's net profit for April–June this year (fiscal year first quarter) was 538 million euros (Hanwha about 908.1 billion won), down 34% from the same period last year. That missed the market consensus of 579 million euros (about 977.3 billion won). Revenue was 4.38 billion euros (about 7.391 trillion won), up about 1% year over year, but a 4% drop in average fares and higher fuel costs led to weaker results.
In particular, after the U.S. airstrike on Iran, international oil prices topped $90 a barrel, increasing the fuel-cost burden. Ryanair hedged part of its fuel needs to guard against price swings, but the unhedged portion was hit directly by the spike. On top of that, as consumers delayed booking trips, ticket prices stayed lower than expected.
Michael O'Leary, Ryanair chief executive officer (CEO), said, "Summer peak-season bookings are up slightly, but fares are below expectations," noting that geopolitical uncertainty and weaker consumer sentiment are weighing on profitability. Citing this uncertainty, Ryanair did not provide guidance for this year.
Even so, Ryanair said industry restructuring could help fares recover over the longer term. Neil Sorahan, Ryanair chief financial officer (CFO), projected that if supply falls due to capacity cuts at some airlines and market reshuffling, fares could rebound starting in 2027.
After Ryanair's earnings release, shares of major European airlines including Wizz Air, Lufthansa, IAG, and Air France-KLM fell across the board. If tensions in the Middle East persist, rising oil prices combined with softer travel demand are expected to further burden the earnings of Europe's airline sector.