Ryanair has warned investors that annual profits may be pressured by the effects of the US-Iran war, with economic uncertainty likely to wipe out any growth in fares during its peak summer months. The airline had previously predicted low single-digit growth in fare costs but now expects pricing to remain flat due to higher oil prices and fears of fuel shortages.
Key Takeaways
Ryanair has warned that summer airfares may remain flat due to economic uncertainty caused by higher oil prices and potential jet fuel shortages. The airline reported record profits but suspended guidance for the next fiscal year, citing volatile fuel costs and environmental taxes. Ryanair's shares dropped as it also announced negotiations to extend CEO Michael O'Leary's contract until 2032.
- Ryanair warns of flat fares due to economic uncertainty
- Record profit reported but no guidance for next fiscal year
- Shares drop amid volatile fuel costs and environmental taxes
- Negotiations ongoing to extend CEO's contract until 2032
According to The Guardian, Ryanair's chief financial officer, Neil Sorahan, expressed confidence that there will be no disruption to jet fuel supplies this summer. However, the airline has cut its outlook for fares this summer, with prices now expected to be 'broadly flat' on last summer. The travel industry has been hit by worries around jet fuel supply due to restricted shipping through the Strait of Hormuz.
Reuters reports that Ryanair's record profit after tax was €2.26bn for the financial year ended in March, slightly ahead of analyst expectations. However, the airline suspended guidance for its 2027 financial year, citing potential increases in fuel costs and environmental taxes. The company has hedged 80% of its jet fuel requirements to April 2027 at about $67 a barrel but warned that unit costs on fuel could still rise if prices remained higher.
Sky News adds that Ryanair's shares dropped by about 4% in early trading, with the stock losing more than a quarter of its value since the start of the year. The airline is also in negotiations to extend CEO Michael O'Leary's contract beyond 2028 to 2032, under which he would be able to buy 10m shares at the market price before the Iran war if ambitious profit and share price growth targets are achieved.
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