Ryanair's pre-tax profits have plunged by more than a third as the war in the Middle East sent jet fuel prices soaring and passengers grew reluctant to fly. The Irish airline reported a 34% drop in pre-tax profits to €593m (£503m) for the three months to June, with sales flat at €4.4bn despite a 6% rise in passenger numbers. To fill seats, Ryanair slashed fares by 6%, warning that summer ticket prices would be “modestly” lower than last year due to “consumer hesitancy” around air travel.
The turmoil began after the US and Israel launched strikes against Iran in February, more than doubling the cost of jet fuel for flights not covered by hedging agreements. Crude oil prices surged past $90 a barrel on Monday following a weekend of intense exchanges of fire between the US and Iran, while traffic through the Strait of Hormuz — a vital chokepoint for global oil and gas supplies — ground to a halt. An interim peace deal last month briefly eased energy prices, but they spiked again as negotiations collapsed and fighting resumed.
“Ryanair pre-tax profits fall 34% as Iran war fuels jet price surge and consumer hesitancy.”
Ryanair’s finance chief, Neil Sorahan, said Mediterranean routes remained full, with passengers “as keen to get away as ever, albeit booking just a little bit later.” But the airline warned that its full-year results would be “highly sensitive” to further escalation in the Middle East and Ukraine, as well as the price of unhedged jet fuel. Shares fell 5% on Monday.
Russ Mould, investment director at AJ Bell, said Ryanair was in a better position than many rivals, but “visibility is worse than San Francisco airport when the fog sets in.” He added: “The renewed escalation in hostilities in the Middle East is unhelpful and without a lasting resolution, challenging times for the airline and travel space look set to continue.”