Ryanair shares plunged 14% on Monday after the budget airline reported a significant 46% drop in quarterly profit, attributing the decline to weaker-than-expected fares. The airline also warned of lower fare expectations in the upcoming months, adding to investor concerns. By 11:28 a.m. London time, Ryanair’s stock had fallen sharply, reflecting the market’s reaction to the disappointing financial results.
This decline was mirrored across the European airline sector, with EasyJet dropping over 6%, Jet2 decreasing by 4%, and Hungarian carrier Wizz Air sliding more than 6%. Ryanair’s quarterly profit after tax for the three months ending in June fell to 360 million euros ($392 million), a stark contrast to the 663 million euros recorded in the same period last year.
The airline attributed this drop to lower fares and the Easter holiday falling into the previous quarter. Despite a 10% increase in passenger traffic to 55.5 million during the quarter, Ryanair struggled with softer pricing. The airline had been operating its largest-ever summer schedule, with over 200 new routes and five new bases, but this was not enough to offset the impact of lower fares.
Ryanair Group CEO Michael O’Leary acknowledged the challenging conditions, stating that fare prices for the next quarter are expected to be significantly lower than those seen last summer. “While Q2 demand is strong, pricing remains softer than we expected,” O’Leary said. O’Leary also noted the difficulty in making forecasts for the remainder of the financial year, citing limited visibility for the third and fourth quarters.
He mentioned that it is too early to provide meaningful guidance for the full year but expressed hope for more clarity by November. The broader European airline industry felt the impact of Ryanair’s announcement, with stocks of major low-cost carriers like EasyJet and Wizz Air experiencing notable declines. The market’s reaction underscores the uncertainty and volatility facing the airline sector amid fluctuating fare expectations.