Ryanair Sees Steep Profit Drop and Fare Weakness Amid Economic Caution

Budget airline Ryanair reported a 46% fall in after-tax profit for its April-June quarter compared to the previous year. Average fares per passenger also dropped 15%, prompting a cautious outlook for the rest of the financial year. The airline cited consumer frugality and fewer aircraft deliveries from Boeing as key challenges.

Budget airline Ryanair on Monday reported a staggering 46% decline in after-tax profit for its April-June quarter compared to the prior year, falling short of analyst estimates. The airline also forewarned that fares for its key summer months would be 'materially lower' than last year. For the three months to the end of June, the first quarter of Ryanair's financial year, the after-tax profit stood at 360 million euros ($392 million), significantly below the 538 million euro forecast in a company poll of analysts.

CEO Michael O'Leary said that the average fares per passenger had fallen by 15% over the quarter, largely due to 'more price stimulation than we had previously expected.' While demand for the upcoming summer months remains robust, pricing is 'softer than expected,' with Q2 fares projected to be lower than last summer.

Chief Financial Officer Neil Sorahan remarked that the dip in fare prices is attributed to consumers being 'a little bit more frugal, a bit more cautious' after two years of double-digit growth in both fares and traffic. Sorahan noted an issue with Boeing deliveries, as Ryanair will receive 20 fewer 737 MAX aircraft than scheduled for this summer, although he expressed confidence in Boeing's recovery efforts.

(With inputs from agencies.)