London (AFP) – Irish no-frills airline Ryanair on Monday said net profit slumped 34 percent in its first quarter as the Middle East conflict sent jet-fuel prices soaring and impacted ticket sales. Profit after tax dropped to 538 million euros ($616 million) in the three months to the end of June, from 820 million euros one year earlier, the Dublin-based carrier said in a statement.
Ryanair, which is Europe’s biggest airline by passenger numbers and flies mainly across the continent, said the cost of fuel not subject to advance purchase agreements had soared owing to the US-Iran war. “Operating costs rose 11 percent to 3.81 billion euros as the price of our 20-percent unhedged jet-fuel more than doubled” in the first quarter, chief executive Michael O’Leary said in the earnings statement.
While passenger traffic grew six percent, fares dropped six percent. Fares “required stimulation as the Middle East conflict led to consumer hesitancy, concerns about EU jet-fuel shortages, economic uncertainty and later bookings,” O’Leary said. He added that Ryanair’s net profit for the remainder of its financial year “remains highly sensitive to… conflict escalation in the Middle East and Ukraine, the price of unhedged jet-fuel, macroeconomic shocks” and European air traffic control strikes.
Ryanair’s share price slid nearly six percent in Dublin midday trading after investors reacted to the bigger-than-expected drop in profits. The airline’s “results show just how quickly nervousness surrounding the war has seeped into booking patterns and operational costs,” noted Susannah Streeter, chief investment strategist at Wealth Club. “It’s a sign that consumers are once again tightening their belts and delaying discretionary spending, leaving airlines exposed not just to soaring jet fuel costs but also the prospect of softer demand.”
© 2024 AFP
