Ryanair Faces Profits Slump Amid Fare Decline

Ryanair's profit fell nearly 50% in its April-June quarter, missing analysts' estimates as fares dropped 15%. The company's management highlighted ongoing deterioration in ticket prices. With European airlines facing a weaker summer, Ryanair's shares plummeted, and efforts to raise fares have been unsuccessful. Boeing 737 MAX delivery delays also add to the challenges.

Ryanair's profit slumped by almost half in its April-June quarter from a year earlier, falling well short of analysts' estimates as fares plunged 15% with management saying that ticket prices were continuing to deteriorate. Europe's largest airline by passenger numbers issued a warning, highlighting worries about a weaker-than-expected summer for airlines amid a waning post-COVID travel boom.

Ryanair shares opened 12% lower while rivals Wizz and easyJet dropped over 6%. British Airways parent IAG and travel firm Tui were also among Europe's biggest fallers. Chief Executive Michael O'Leary stated in a video presentation, 'Fares are now moving materially lower than the prior year, and pricing continues to deteriorate.'

Efforts to boost fares in recent weeks failed as consumers resisted, he added. The after-tax profit for the three months to the end of June, Ryanair's first fiscal quarter, was 360 million euros ($392 million), down 46% year-over-year and significantly below the 538 million euro profit forecast in a company poll of analysts.

Average fares per passenger fell 15% from the previous year as the airline engaged in 'more price stimulation than we had previously expected,' O'Leary said in a statement. He forecast materially lower fares for the current quarter compared to last summer. Liberum analyst Gerald Khoo noted, 'We expect significant downside risk to consensus estimates, with aggressive pricing by the market leader likely causing adverse fallout for other European airlines.'

Ryanair's shares were at 14.43 euros at 0750 GMT, down nearly one-third from an April 8 all-time high of 21.62 euros.

In the July-September quarter, fares are expected to be softer and trending materially lower, CFO Neil Sorahan stated, attributing this to more frugal and cautious consumer behavior. He could not predict when the weakness might end, adding that it's too early to forecast the full financial year's profit, ending March 31.

Ryanair also reported that it would receive 20 fewer Boeing 737 MAX aircraft than scheduled for the peak summer season, although noting improvements in delivery quality and frequency. Sorahan expressed reasonable confidence that Boeing would recover the backlog and deliver the final 50 aircraft for next summer, with MAX 10 deliveries starting as scheduled in 2027.

(With inputs from agencies.)