Ryanair’s Profits Just Fell By A Third Over Higher Fuel Prices And The Iran War. Its Stock Dropped
Ryanair reported a sharp decline in first-quarter profit Monday as higher fuel costs and softer ticket prices weighed on earnings, underscoring how geopolitical tensions in the Middle East continue to ripple through the global aviation industry. It’s stock fell more than 5% on the news.
The Irish budget carrier said profit after tax for the three months ended June 30 fell 34% to 538 million euros ($615.3 million), down from 820 million euros a year earlier. It added that passengers delayed booking summer holidays amid concerns surrounding the Iran conflict and its impact on energy markets and fuel supplies.
Ticket fares fell 6% during the quarter, while operating costs rose 11% to 3.81 billion euros. Ryanair said approximately 20% of its fuel requirements remained unhedged during the period, leaving it exposed to a sharp increase in jet fuel prices, according to CNBC.
“Q1 fares required stimulation as the Middle East conflict led to consumer hesitancy, concerns about EU jet-fuel shortages, economic uncertainty and later bookings,” Ryanair CEO Michael O’Leary said in the company’s earnings release, according to CNBC.
Despite the weaker earnings, Ryanair executives said demand for travel remains resilient. Chief Financial Officer Neil Sorahan said more than 715,000 passengers were expected to fly with the airline on Monday, adding that there was “no shortage of bookings” and that consumers were simply booking closer to their departure dates.
The airline’s results come after several weeks of volatility in oil markets following hostilities involving Iran and the United States earlier this year. Concerns about the security of shipping routes through the Strait of Hormuz pushed up energy prices and renewed scrutiny of Europe’s dependence on Middle Eastern fuel supplies.
The International Air Transport Association’s Jet Fuel Price Monitor showed average jet fuel prices reaching approximately $127 per barrel during the week ending July 10, representing a 41% increase from the previous year, according to figures cited by CNBC.
The International Energy Agency previously warned that Europe could face jet fuel shortages if disruptions to Middle Eastern supply routes persisted. European airlines have increasingly sought alternative supply arrangements as fuel costs remain elevated, according to Reuters.
Ryanair said its conservative hedging strategy continues to provide a competitive advantage. The airline has hedged 80% of its jet fuel requirements for fiscal 2027 at $67 per barrel and 15% of its fuel needs for fiscal 2028 at $85 per barrel, according to CNBC.
The company also emphasized its financial position, noting that it repaid its final €1.2 billion bond in May and is now effectively debt-free. O’Leary and Sorahan both suggested that smaller competitors may face increasing pressure as they contend with higher fuel costs and softer pricing across Europe.
Industry analysts have already observed signs of stress among some regional carriers. Several smaller European airlines have either entered restructuring processes or ceased operations over the past year amid rising costs and increased competition from low-cost operators, according to Reuters.
John Strickland, director of aviation consultancy JLS Consulting, said Ryanair continues to benefit from its ancillary revenue model, which generates additional income through services such as baggage fees, onboard purchases and travel partnerships. Those non-ticket revenues account for roughly 20% to 25% of the airline’s total revenue, according to comments made on CNBC’s “Squawk Box Europe.”
