Ryanair quarterly profit plummets

Ryanair’s profits slumped by almost half in the three months to the end of June after ticket prices plunged 15 per cent from the same period last year as consumers balked at paying inflated prices for last-minute flights.

Shares in Ryanair, Europe’s largest airline by passenger numbers, were down 14 per cent by 1045 GMT as its results fell well short of analyst forecasts and underscored worries about a weaker-than-expected summer for airlines as a prolonged post-COVID travel boom wanes.

Shares of rivals Wizz and easyJet were down around 8 per cent. British Airways parent IAG and travel firm Tui were also among the biggest fallers in Europe.

“The trend is downwards and weaker,” Chief Executive Michael O’Leary told investors in an analyst call.

“It could well be a double-digit (percentage) decline in pricing in Q2,” he said, referring to the July-September quarter. “And at that stage... all bets are off in Q3 and Q4.” In May, O’Leary had forecast fares “flat to modestly up” for the summer.

Every time in recent weeks that Ryanair removed lower-priced fares for last-minute tickets, the remaining higher-priced tickets failed to sell and the airline reinstated the lower fares to fill seats, he said. After-tax profit for the three months to the end of June, the first quarter of Ryanair’s financial year, was 360 million euros ($392 million), down 46 per cent on the same period last year and well below the 538 million euro profit forecast in a company poll of analysts.

The 15 per cent fall in average fares per passenger was a result of “more price stimulation than we had previously expected”, O’Leary said.

Ryanair’s shares are down by around a third from their April 8 all-time high of 21.62 euros.

“We expect significant downside risk to consensus estimates (for full-year profit),” Liberum analyst Gerald Khoo said in a note. “More aggressive pricing by the market leader is likely to result in adverse fallout for the other European airlines.”