Shares in Ryanair (RYA.IR) declined early Monday morning after the budget airline reported a 34% year-over-year drop in its fiscal first-quarter profit, citing the impact of the Middle East conflict and higher fuel costs.
Attributable profit for the three months ended June 30 declined to 537.7 million euros from 819.9 million euros a year earlier. EPS slipped to 0.5121 euro from 0.7659 euro.
The stock was down 7% in early morning trading in Dublin.
Operating revenue, however, inched up to 4.38 billion euros from 4.34 billion euros earlier, with a 6% growth in passenger traffic but at 6% lower fares.
"Q1 fares (which benefitted from a full Easter during April 2025) required stimulation as the Middle East conflict led to consumer hesitancy, concerns about EU jet-fuel shortages, economic uncertainty and later bookings," Chief Executive Michael O'Leary said.
Operating costs rose 11% to 3.81 billion as the cost of the airline's 20% unhedged fuel more than doubled during the quarter. The company's 2027 fuel is 80% hedged at $67 per barrel and 15% hedged for 2028 at $85 per barrel.
The company's "conservative hedging policy" protects its "earnings during volatile oil markets and widens our cost advantage over all other EU competitors," O'Leary said, noting that "unprofitable airlines (hit by higher jet-fuel prices and strong US dollar) face a difficult winter."
Looking ahead, Ryanair expects passenger traffic to grow 4% in 2027 to 216 million. However, it warned that 2027 profit remains highly sensitive to external risks, including any escalation of conflicts in the Middle East and Ukraine, fluctuations in unhedged fuel prices, macroeconomic shocks, and continued European air traffic control strikes and operational disruptions.
