Ryanair Holdings NASDAQ:RYAAY, an Irish budget airline, reported a 34% decline in first-quarter profit as the Middle East conflict pushed oil prices higher and weakened demand during the peak summer travel season. Profit after tax fell to 538 million, or $616 million, from 820 million a year earlier, missing Bloomberg analysts' estimate of about 624 million. The airline said concerns about possible jet-fuel shortages made consumers more hesitant and encouraged them to book later, forcing Ryanair to lower fares to support demand. The results sent the stock down as much as 6.7% in early European trading, marking its biggest decline since mid-April. Before the latest drop, Ryanair shares had already fallen about 12% this year after gaining 55% during 2025.
As the first major European carrier to publish results for the quarter, Ryanair's performance may provide investors with an early indication of how the region's airline industry has been affected by the Iran war. The company said fiscal second-quarter fares remain modestly below the previous year's level, although bookings have recently improved. Ryanair declined to provide full-year profit guidance because management has limited visibility into the second half, with fare performance during the first half expected to depend partly on bookings in August and September. Chief Financial Officer Neil Sorahan said the airline appears positioned for a profitable year, but management believes it is still too early to provide specific earnings figures.
Ryanair also expects short-haul capacity to remain restricted until at least 2030 because of aircraft shortages involving Boeing NYSE:BA, a U.S. aircraft manufacturer, and Airbus, a European aircraft manufacturer, along with engine problems that have partially grounded fleets across the region. Sorahan suggested that industry consolidation could place further pressure on capacity, pointing to EasyJet, a UK budget airline, which is involved in a takeover battle between two U.S. investors. Ryanair's unit and operating costs increased during the quarter as its unhedged fuel exposure more than doubled, although the airline has secured 80% of its jet-fuel requirements at $67 per barrel through March. Full-year unit costs will partly depend on the remaining 20% of fuel that is unhedged over the next three quarters. Ryanair plans to direct spending toward expanding its Boeing 737 Max-10 fleet, paying shareholder dividends, completing its share-buyback program, and restoring its gross cash cushion to 4 billion.