Ryanair Holdings Plc, a low-cost carrier, saw its share price fall sharply following the release of quarterly results showing a profit decline. The pressure on earnings was attributed to a reduction in average ticket prices and increased fuel costs stemming from geopolitical tensions.
The stock, trading under the symbol RYA, dropped 6.9% during European morning trading, bringing its year-to-date decline to 18%.
The Dublin-based airline reported on Monday that its net profit for the three-month period ending in June was 537.7 million euros, equivalent to approximately 615.1 million US dollars. This compares to a net profit of 819.9 million euros in the same quarter last year.
Revenue saw a modest increase, rising to 4.38 billion euros from 4.34 billion euros a year earlier. Income from ancillary services, such as baggage fees and onboard sales, remained largely stable. According to data from Visible Alpha, market analysts had previously anticipated revenue of around 4.48 billion euros.
During the quarter, Ryanair carried 61.3 million passengers, representing a 6% increase compared to the previous year.
The airline indicated that the average ticket price for the quarter was 6% lower year-over-year. This was impacted by a combination of factors: subdued consumer travel demand, passengers booking closer to their departure dates, and market concerns over potential jet fuel supply shortages. Ongoing conflict in the Middle East has weighed on the company's operations in recent months, both by driving up aviation fuel prices and by creating geopolitical uncertainty that has led many travelers to delay their booking decisions.
Analysts at Morgan Stanley noted that the weaker-than-expected financial performance exceeded market forecasts. However, analysts at RBC Capital Markets maintained a more optimistic outlook. In a research note, RBC analyst Ruairi Cullinane suggested that the most challenging period of price pressure on short-haul routes may have already passed.
Looking ahead, Ryanair stated that passenger traffic for its 2027 fiscal year is still projected to grow by 4%. Although recent passenger numbers have shown a recovery and the airline has reduced some promotional discounting, average ticket prices in the second quarter remained slightly lower compared to the same period last year.
The company added that the market outlook for the second half of the year is highly uncertain, and it is therefore unable to provide specific profit-after-tax guidance for the current fiscal year at this stage.
Chief Executive Michael O'Leary commented that the profit outlook for fiscal 2027 is heavily dependent on the evolution of external geopolitical conditions.
Earlier this year, several other European airlines and travel groups had also revised down their performance expectations due to the impact of the conflict.
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