This photograph shows an aircraft of low-cost Irish airline Ryanair parked at the Thessaloniki airport “Makedonia”, in Thessaloniki on May 7, 2026.
Sakis Mitrolidis | Afp | Getty Images
Ryanair warned on Monday that struggling European airlines are facing a “difficult winter” ahead, as the budget carrier reported first-quarter profit that took a 34% hit due to consumers delaying bookings amid the Middle East crisis
The airline saw its profit after tax in the April to June quarter fall to 538 million euros ($615.3 million), down from 820 million euros the previous year.
Ryanair said 20% of its unhedged fuel was exposed to price spikes, while ticket fares declined 6%. Operating costs also rose 11% to 3.81 billion euros as the price of its 20% unhedged fuel more than doubled in the quarter.
Shares were last seen down 6.8%. The stock is up nearly 5% this year.
The company’s jet fuel for 2027 is currently 80% hedged at $67 per barrel, and 15% hedged for 2028 at $85 per barrel.
“Q1 fares (which benefitted from a full Easter during April 2025) required stimulation as the Middle East conflict led to consumer hesitancy, concerns about EU jet-fuel shortages, economic uncertainty and later bookings,” Ryanair CEO Michael O’Leary said.
O’Leary added that the company’s “conservative hedging policy” insulates it from the volatility of oil prices as the Middle East turmoil continues, giving it a “cost advantage over all other EU competitors,” while “unprofitable airlines face a difficult winter.”
Travelers were anxious to book their summer holidays at the onset of the war, forcing Ryanair to lower fares, which means despite increased traffic, revenue still took a hit, John Strickland, aviation analyst and director of JLS Consulting, explained on CNBC’s “Squawk Box Europe” on Monday.
“We’ve [got] over 715,000 people flying with us today,” Ryanair’s CFO Neil Sorahan said on CNBC’s “Squawk Box” on Monday. “No shortage of bookings. No shortage of people traveling. They’re just booking that little bit closer in.
“I think there was some hesitancy back early in the first quarter, where there were some concerns around fuel supply. We all know that’s not an issue. Lots and lots of fuel to get people out and back home again. Just good value for consumers in the market at the moment.”
Ryanair issued conservative guidance for the rest of its financial year, with operating costs highly dependent on the price of its unhedged jet fuel. Meanwhile, profit after tax remains “highly sensitive” to adverse geopolitical developments, including escalating conflict in the Middle East and Ukraine, the company said.
“Despite a recent, slight uptick in volumes, and less price stimulation, Q2 pricing is trending modestly down (y-o-y), and the final H1 fare outcome is heavily dependent on the strength of close-in bookings in Aug. and Sept,” O’Leary said. “As is normal this early in the year, we have zero H2 visibility, so it remains far too early to provide any meaningful FY27 PAT guidance.”
Winter ‘failures’ coming
CFO Sorahan noted that the Middle East conflict will lead to some “shakeout in capacity” in weaker European airlines.
“There are a lot of carriers out there that don’t have the cost base that Ryanair has, don’t have the balance sheet,” Sorahan said. “We paid down our final bond, 1.2 billion, in May, so we’re now effectively debt-free, and we own all of the assets.”
“So I think once you get into the winter period, some of the weaker carriers are going to find it very difficult, and we may see some failures over the next number of months,” Sorahan continued.
The average price of jet fuel has surged to $127 per barrel for the week ending 10 July, up 41% from the prior year, per the International Air Travel Association’s Jet Fuel Price Monitor.
At the time, the International Energy Agency warned that Europe could run out of jet fuel in a matter of weeks, as the majority of its jet fuel imports came from the Middle East. The region has had to look to international markets to secure alternative supply.
JLS’ Strickland noted that a few smaller airlines have failed in recent weeks, with winter bringing even greater pressures from failures to cancelations.
“I would expect to see much more severe cancelations in the weaker winter season this year than we’ve seen for a long time across a whole range of airlines if fuel prices stay high.”
CEO O’Leary said in April: “We can guarantee people there’ll be no price increases, no fuel hedging, no fuel surge levy surcharges, regardless of what happens to summer supply,” he added.
Strickland said the company benefits from a “load factor active revenue passive approach,” which means selling seats at marginally low rates, while expecting passengers to spend on additional services.
“Of course, any passenger in a seat, even if the actual ticket price is low, they’ll spend something, maybe just a cup of coffee on board, but it could well be an extra bag, or buying a rental car through Ryanair. So that’s a massive driver, around about 20- 25% or so of the company’s total revenues,” Strickland said.
