Ryanair profits drop by nearly 50% due to reduced summer fares

22 July 2024 , 12:49

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Ryanair profits drop by nearly 50% due to reduced summer fares

Europe’s largest airline says passengers are waiting until later in the season to book tickets

Ryanair has said its profits plunged by almost half between April and June and warned that fares this summer would be “materially lower” than last year.

Europe’s largest airline reported profits of €360m (£303m) in the spring quarter, 46% lower than the same period last year, despite passenger numbers rising 10% to 55.5 million. 

The downbeat results, which missed analysts’ estimates, drove the budget carrier’s share price down 12.5% in early trading on Monday.

The news also appeared to have a knock-on effect on other publicly traded airline stocks. EasyJet fell 7.5%, Wizz Air was down 6.3% and IAG, the owner of British Airways and Iberia, slipped 3.3%. 

The shares were also under pressure after airports and airlines around the world were hit by a Microsoft IT outage on Friday that led to the cancellation of more than 5,000 flights.

Ryanair said its average fare cost dropped from €49.07 to €41.93 year on year, but the increase in passenger numbers helped limit the decline in total revenues to 1% at €363bn.

Ryanair said while it expected strong demand this summer, with passenger numbers likely to be up 8% overall this financial year, “pricing remains softer than we expected”.

“We now expect second-quarter fares [July to September] to be materially lower than last summer,” the company said. “The final first-half outcome is, however, totally dependent on close-in bookings and yields in August and September.”

“Close-in bookings” refer to customers waiting much longer than usual to book summer flights.

This month Jet2, the Leeds-based travel company that flies from 12 UK airports to more than 65 destinations in Europe, said customers faced “modest” price rises this summer as it adjusted to the shift to later bookings.

Ryanair also said on Monday that it had been hit by air traffic control capacity, which had been restricted by various factors including strikes abroad and increasing gaps between planes to ensure safe landings during extreme weather.

“In the last 10 days of June, we suffered a significant deterioration in European air traffic control capacity, which caused multiple flight delays and cancellations, especially on first-wave morning flights,” said the Ryanair chief executive officer, Michael O’Leary.

“[This makes it] more urgent than ever that the new European Commission and parliament deliver long-delayed reform of Europe’s hopelessly inefficient air traffic control services.”

James Smith