Ryanair Reports 18% Drop in H1 Profit Amid Weaker Fare Trends

Photo : Reuters

Ryanair, Europe's largest low-cost airline, announced on Monday that it has adjusted its passenger growth target for the upcoming year, citing delays in Boeing aircraft deliveries as the primary reason. The airline has lowered its passenger forecast for the year ending March 2026 from 215 million to 210 million, a move that aligns with previous reports.

As a result of this news, Ryanair's shares experienced a decline of 3.1%, trading at €17.47 as of 08:20 GMT.

In its financial report, Ryanair revealed an after-tax profit of €1.79 billion ($1.95 billion) for the six-month period ending September 30, reflecting an 18% decrease compared to the previous year. This decline was largely attributed to a 10% drop in average fares, a trend that was anticipated according to an analyst poll conducted by the company.

Despite the profit drop, Ryanair's Group CEO, Michael O'Leary, expressed optimism regarding the current quarter, stating that fares are expected to be "modestly lower" than the same period last year. He highlighted that forward bookings are robust, and the demand for tickets remains strong. Additionally, O'Leary noted that the recent decline in ticket prices appears to be stabilizing.

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Chief Financial Officer Neil Sorahan provided further insights, indicating that the average fare decline for the third quarter is likely to be less than 5%. He pointed out that the reduction in ticket prices has been influenced by high interest rates affecting consumer spending and the decision by some online travel agents to cease selling Ryanair flights in early December due to legal and regulatory pressures. However, Sorahan reassured that the travel agent issue is largely resolved, with new agreements in place with most agents.

Looking ahead, Sorahan remains hopeful that constrained market capacity and lower interest rates will create a more favorable environment for ticket pricing in the upcoming year.

The adjustment to Ryanair's passenger forecasts is based on the expectation that Boeing will deliver 15 of the 29 737 MAX aircraft originally scheduled for arrival by next summer. Sorahan acknowledged that there is a significant risk surrounding this projection due to ongoing strikes at Boeing, which have impacted the company’s production capabilities. O'Leary characterized these delivery delays as "a pain in the backside."

In recent developments, Boeing's shares saw a 3.5% increase on Friday, driven by speculation that workers at the company's U.S. West Coast factory will approve a new wage agreement, potentially bringing an end to a seven-week strike that has severely affected jet production and the company's finances.

Market analysts are monitoring the situation closely, with Goodbody analyst Dudley Shanley suggesting that while Ryanair's financial outlook for fiscal year 2025 may improve slightly, the market will likely focus on the implications of the lowered passenger targets for fiscal year 2026 and their potential impact on net income forecasts.

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