Ryanair Profits Fall as Fuel Costs Rise

Ryanair profits fell after the Ryanair fuel costs story turned into a warning about war, oil and traveler caution, with the airline saying higher jet fuel prices and softer booking patterns hit results in the latest quarter. The Irish carrier reported that pre-tax profit dropped sharply between April and June as sales held steady and fare cuts were used to pull in customers.

The airline said pre-tax profits fell by 34% to €593m, or £503m, while revenue edged up 1% to €4.4bn. Passenger numbers rose 6% to 6.1 million, helped by the Easter holiday in April, but fares fell 6% as Ryanair lowered prices to encourage demand. The company also said it expects summer fares to come in slightly below last year’s level because travelers remain hesitant about booking flights.

Ryanair linked the pressure to the broader shock in energy markets after the US and Israel launched strikes against Iran in February. The cost of fuelling a plane has climbed since then, and the airline said the price of fuel not covered by its hedging arrangements has more than doubled. It also warned that its full-year results will be highly sensitive to outside forces, including any escalation in the Middle East or Ukraine and the price of unhedged jet fuel.

Oil markets have reflected that strain. Crude prices briefly reached $90 a barrel on Monday before easing back after a weekend of heavy exchanges of fire between the US and Iran. Traffic through the Strait of Hormuz, a major route for global oil and gas shipments, has ground to a halt, while an interim peace deal last month brought only temporary relief before prices jumped again when negotiations broke down and fighting resumed.