Ryanair profit plummets on lower fares, sending shares down 15%

By Conor Humphries

DUBLIN (Reuters) -Ryanair's profits slumped by almost half in the three months to the end of June as ticket prices plunged 15% from the same period last year, heightening fears of a weak summer for Europe's airlines as the post-COVID boom peters out.

Ryanair's shares were down 15% by 1155 GMT, its worst single-day fall since 2016, with shares one-third lower than their early April all-time peak. Rivals Wizz and easyJet were down around 9% and 8% respectively.

"The trend is downwards and weaker," Ryanair Chief Executive Michael O'Leary told investors in an analyst call after the results on Monday.

After-tax profit for the three months to the end of June, the first quarter of Ryanair's financial year, was 360 million euros ($392 million), down 46% on the same period last year and well below the 538 million euro profit forecast in a company poll of analysts.

O'Leary said it was far too early to forecast the outlook for the year, but said there was no sign of an end to the weakness.

"It could well be a double-digit (percentage) decline in pricing in Q2," he said, referring to the July-September quarter. "And at that stage... all bets are off in Q3 and Q4."

O'Leary, who in May had forecast fares "flat to modestly up" for the summer, said the best case for July-September was now falls of 5%.

LAST-MINUTE WEAKNESS

Ryanair makes significant profit from high last-minute fares, but O'Leary said every time in recent weeks that it removed lower-priced fares for last-minute tickets, the remaining higher-priced tickets failed to sell.

"We are repeatedly seeing price resistance," he said, adding that the airline planned to "aggressively" advertise low fares.

Chief Financial Officer Neil Sorahan put the weakness down to consumers being "a little bit more frugal, a bit more cautious" and a "rebalancing" after two years of double-digit growth in fares.

Asked when the weakness might end, Sorahan said: "Who knows?"

Liberum analyst Gerald Khoo said he expected significant downside risk to consensus estimates for Ryanair's full-year profit as a result of the results.

"More aggressive pricing by the market leader is likely to result in adverse fallout for the other European airlines," Khoo said in a note.

O’Leary said Boeing had warned him in recent days that some 737 MAX deliveries due by next spring would be delayed until the peak summer months of 2025 – a repeat of delays this year that forced a cut in summer traffic volumes.

"We will have less capacity into summer '25 than we were originally scheduled to have," he said.

($1 = 0.9184 euros)

(Reporting by Conor Humphries; Editing by Jamie Freed, Kirsten Donovan and Susan Fenton)