The Irish low-cost airline said profit after tax fell to 538 million euros ($616 million) in the three months ending in June, down from 820 million euros during the same period a year earlier, according to a company statement, News.Az reports, citing AFP.
Ryanair, Europe’s largest airline by passenger numbers, said the U.S.-Iran conflict caused a sharp increase in the cost of jet fuel not covered by advance purchase agreements.
“Operating costs rose 11 percent to 3.81 billion euros as the price of our 20-percent unhedged jet-fuel more than doubled” during the first quarter, Chief Executive Michael O’Leary said in the earnings statement.
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Although passenger traffic increased by six percent, average fares declined by the same percentage.
O’Leary said lower fares were needed to stimulate demand as the Middle East conflict contributed to consumer caution, concerns over potential jet fuel shortages in Europe, broader economic uncertainty, and later-than-usual booking patterns.
He also warned that Ryanair’s net profit for the remainder of its financial year remains “highly sensitive” to further escalation of conflicts in the Middle East and Ukraine, fluctuations in the price of unhedged jet fuel, macroeconomic shocks, and air traffic control strikes across Europe.
Ryanair shares fell nearly six percent in midday trading in Dublin as investors responded to the larger-than-expected decline in quarterly earnings.
Commenting on the results, Susannah Streeter, chief investment strategist at Wealth Club, said they demonstrated “just how quickly nervousness surrounding the war has seeped into booking patterns and operational costs.”
“It’s a sign that consumers are once again tightening their belts and delaying discretionary spending, leaving airlines exposed not just to soaring jet fuel costs but also the prospect of softer demand,” she added.
