Ryanair's profits have plummeted by 36 per cent to €593 million in the first quarter of this year, as soaring jet fuel costs and the Middle East conflict bite into Europe's budget air travel giant. The airline's pre-tax profit decrease is a stark reminder of the escalating challenges facing carriers across the industry.
Jet fuel prices have surged, with the 20 per cent not covered by Ryanair's hedging contracts more than doubling to $150 per barrel. This has pushed up the airline's total operating costs by 11 per cent to €3.8 billion over the period.
A six per cent increase in passenger traffic hasn't been enough to offset the impact of discounted fares, which have seen overall revenue slip by one per cent to €4.3 billion. Ryanair CEO Michael O'Leary points to consumer hesitancy and concerns about potential EU jet-fuel shortages as key factors driving this trend.
Airlines are warning that fears of travel disruption linked to the Iran conflict are causing holidaymakers to book closer to their departure dates, making it harder for carriers to plan and manage pricing. O'Leary notes a recent uptick in volumes but cautions that second-quarter pricing remains down year-on-year. The outcome for the first half will depend on strong close-in bookings throughout August and September.
Ryanair is taking steps to mitigate rising energy costs, with 80 per cent of its fuel needs for this financial year hedged at a more favourable $67 per barrel. However, only 15 per cent of its fuel requirement for the 2028 financial year is currently hedged, at a higher rate of $85 per barrel – indicating ongoing pressure on profitability.
Despite these challenges, Ryanair's chairman Stan McCarthy has welcomed the extension of CEO Michael O'Leary's contract by six years, citing benefits for shareholders.