Key Highlights
First-quarter net profit plunged 34% to €538 million, falling short of analyst expectations by 7%
Ticket prices declined 6% compared to the previous year as Middle East tensions impacted demand
Unhedged fuel expenses more than doubled following US-Israel military action against Iran
Second-quarter fare guidance revised downward to “modestly lower” versus earlier flat projections
Morgan Stanley maintains “overweight” recommendation with €27.60 target price
Shares of Ryanair experienced a decline exceeding 5% on Monday following the budget carrier’s announcement of sharply reduced first-quarter earnings and a downward revision to its summer fare expectations.
The Irish airline posted net profit of €538 million for the three months ending in June, representing a 34% decrease from the €820 million recorded in the same period last year. The figure fell short of the consensus estimate of €579 million and significantly underperformed Morgan Stanley’s projection of €639 million.
Revenue climbed a modest 1.1% year-over-year to €4.43 billion, marginally missing the analyst consensus of €4.48 billion.
Ryanair Q1 2026 Earnings
– Rev. EU4.38B (est EU4.45B)
– Profit After Tax EU538M (est EU623.5M)
– Customers 61.3M, +5.9% Y/Y
– Load Factor 94% (est 94.4%)
– Still Sees FY Customers 216M (est 216.94M)
— LiveSquawk (@LiveSquawk) July 20, 2026
The primary headwind came from weakening ticket prices. Average fares contracted 6% during the quarter — a steeper decline than the airline had previously anticipated — as passengers delayed bookings amid escalating geopolitical uncertainty in the Middle East region.
Chief Executive Michael O’Leary identified two primary challenges during the earnings call: “The principal cause of this was the price of our 20% unhedged fuel doubled in the quarter and fares fell 6%, primarily, we think, due to the impact of the Middle East conflict.”
Surging Fuel Expenses
Following military strikes by the United States and Israel against Iranian targets in February, aviation fuel prices experienced a sharp spike. While Ryanair had secured hedges for the majority of its fuel needs, the unprotected portion — approximately 20% of total consumption — saw costs more than double throughout the quarter.
Crude oil briefly touched $90 per barrel after an intense weekend of US-Iran confrontations before moderating somewhat. Maritime traffic through the Strait of Hormuz, a critical artery for global petroleum supplies, has essentially ground to a halt.
A temporary peace agreement reached last month provided short-lived relief to energy markets, but those benefits evaporated as negotiations collapsed and hostilities recommenced.
Non-fuel expenses per passenger actually performed 1.5% better than consensus forecasts, while the load factor remained robust at 94%, indicating aircraft continued to operate at near-full capacity.
Forward Guidance and Boeing Developments
Ryanair has revised its second-quarter fare outlook, now projecting prices will be “modestly lower” year-over-year, retreating from previous guidance suggesting relatively flat pricing. O’Leary characterized the expected decrease as falling in the “low to mid single digits” range.
The carrier maintained its full-year passenger volume projection, anticipating a 4% increase to 216 million travelers.
Regarding cost expectations, Ryanair withdrew its earlier forecast for mid-single-digit unit cost inflation. Management now indicates the final outcome will hinge on movements in unhedged fuel prices, which analysts had previously modeled at 1%-2% growth.
Chief Financial Officer Neil Sorahan emphasized Ryanair’s expanding cost advantage versus competitors. He noted the unit cost differential with Wizz Air has expanded from 26% pre-pandemic to over 81% currently, while the gap with easyJet has widened from approximately 70% to roughly 150%.
Regarding Boeing developments, O’Leary indicated MAX-10 certification should occur “sometime in September or October,” with initial deliveries of 15 aircraft scheduled for spring 2027. Ryanair has protected 60% of its 150 MAX-10 aircraft order against euro-dollar currency fluctuations at a rate just above 1.23.
Morgan Stanley anticipates full-year consensus net income projections will decline from approximately €2.1 billion to around €1.9 billion in light of these results, though the firm retained its “overweight” rating and €27.60 price objective.
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