Ryanair has reported a sharp decline in quarterly earnings after rising fuel costs and weaker customer demand combined to weigh heavily on the airline’s financial performance.
The low-cost carrier said uncertainty surrounding ongoing conflict in the Middle East has increased operating expenses while making some travellers more cautious about booking flights during the busy summer travel season.
Earnings Fall Despite Stable Revenue
For the three months between April and June, Ryanair posted pre-tax profits of €593 million (£503 million), representing a 34% decline compared with the same period last year.
Although overall sales remained broadly unchanged, the airline said it had to reduce ticket prices to encourage bookings, limiting its ability to grow revenue despite maintaining strong passenger volumes.
Rising Jet Fuel Costs Add Pressure
Fuel has become one of the airline’s biggest challenges following increased tensions involving the United States, Israel and Iran earlier this year.
Ryanair explained that while much of its future fuel supply is protected through hedging agreements, the fuel purchased outside those contracts has become significantly more expensive, with some costs more than doubling.
The increase has placed additional pressure on operating margins at a time when airlines are already dealing with an uncertain global economic environment.
Oil Prices Continue Climbing
The latest escalation in the Middle East has also driven global oil prices higher.
Brent crude, the international benchmark, rose by around 2.5% after crude oil climbed above $90 per barrel for the first time in a month.
Market concerns have intensified as shipping through the strategically important Strait of Hormuz has been disrupted, raising fears over the stability of global oil and gas supplies.
Airline Expects Softer Summer Ticket Prices
Looking ahead, Ryanair expects average fares between July and September to remain slightly below last year’s levels.
The airline said customers are showing greater caution when making travel plans, prompting it to continue offering competitive prices to stimulate demand during the peak holiday season.
While passenger numbers remain healthy, the company acknowledged that consumer uncertainty is influencing booking patterns.
External Risks Cloud Financial Outlook
Ryanair warned that its performance over the remainder of the financial year will depend heavily on developments beyond the airline’s control.
Management identified continued conflict in both the Middle East and Ukraine, along with further increases in fuel prices, as the biggest threats to future profitability.
The company noted that any additional rise in unhedged jet fuel costs could have a significant impact on earnings.
Analysts Warn of Further Oil Price Surge
Market analysts believe the situation could worsen if geopolitical tensions continue to escalate.
Investment strategist Shane Oliver said a prolonged disruption to shipping through the Strait of Hormuz could force oil prices substantially higher, potentially reaching $150 per barrel if global supply is severely constrained.
While he stressed that such an outcome is not currently the most likely scenario, he warned that the risk has become increasingly significant as the conflict continues.
Aviation Industry Faces Growing Uncertainty
Ryanair’s latest results highlight the growing challenges confronting airlines as geopolitical instability ripples through global energy markets.
With fuel accounting for one of the industry’s largest operating expenses, continued volatility in oil prices and cautious consumer spending could create further pressure on airlines heading into the remainder of the year, leaving carriers closely monitoring developments in the Middle East.
