By Rajwa Quasim
Ryanair holdings share fell more than 6% as it missed market expectations of first-quarter net come than the forecast due to rising prices for its unhedged fuel and declining ticket fares amid ongoing Iran war.
The low-cost airline generated net income of €538 million ($615.3 million) during the quarter, fell from the €820 million in the same period last year — a decline of 34.4%. The analysts forecasted €579 million. Although total revenue rose 1% to €4.38 billion, the operating costs jumped to 11%, which is around €3.8 billion, squeezing margins.
Ryanair’s stock fell more than 5% following the earnings release. Shares were last seen down 6.8%.
CEO Michael O’Leary explained that the Middle East conflict has made travelers hesitant to book as they were worried about jet-fuel shortages in Europe and broader economic uncertainty. As a result, customers waited till the end to confirm trips, which made Ryanair discount fares and maintain booking volumes. He also added that the airline benefitted in Q1 fares during April 2025 largely due to Easter but this year needed a stimulation. “Unprofitable airlines face a difficult winter,” O’Leary said in its earnings report.
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The U.S.-Iran war has driven jet-fuel prices sharply higher with Ryanair’s 20% unhedged fuel exposed to price hikes. The airline had to absorb much of that price hike directly, adding significantly to costs.
Despite the hit, its conservative hedging strategy gives it an edge over the rivals. The company’s jet fuel for 2027 is currently 80% hedged at $67 per barrel, and 15% hedged for 2028 at $85 per barrel. O’Leary said this hedging policy protects Ryanair from further oil price swings and widens its costs advantage over competitors who are less protected.
“We’ve over 715,000 people flying with us today,” Ryanair’s CFO Neil Sorahan said on CNBC’s “Squawk Box” on Monday. “No shortage of bookings. No shortage of people traveling. They’re just booking that little bit closer in.
“I think there was some hesitancy back early in the first quarter, where there were some concerns around fuel supply. We all know that’s not an issue. Lots of fuel to get people out and back home again. Just good value for consumers in the market at the moment,” he said.
Since the airline’s costs still heavily depend on unhedged jet fuel prices, Ryanair has conservative guidance for the rest of the financial year. The airline also warned that after-tax profit remains “highly sensitive” to geopolitical events, including escalation of conflicts in Ukraine and Middle East.
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“Despite a recent, slight uptick in volumes, and less price stimulation, Q2 pricing is trending modestly down (y-o-y), and the final H1 fare outcome is heavily dependent on the strength of close-in bookings in Aug. and Sept,” O’Leary said. “As is normal this early in the year, we have zero H2 visibility, so it remains far too early to provide any meaningful FY27 PAT guidance.”
The airline’s load factor remained unchanged at 94%. O’Leary also provided an update on Boeing’s MAX-10 programme, stating that certification is expected “sometime in September or October of this year,” while adding that Boeing remains on schedule to deliver the first 15 aircraft during spring 2027.
According to the International Air Travel Association’s Jet Fuel Price Monitor, average jet fuel prices jumped to $127 a barrel for the week ending July 10, a 41% rise compared to a year earlier. Then the International Energy Agency cautioned that Europe could run out of jet fuel within weeks since most of its supply came from the Middle East. Therefore, pushing the region to seek alternatives from international markets.