Ryanair's shares slumped 17% today after it reported a 46% fall in after-tax profit for its April-June quarter from the previous year, missing analyst estimates, and warned that fares for its key summer months would be "materially lower" than last year.
After tax-profit for the three months to the end of June, the first quarter of Ryanair's financial year, was €360m, well below the €538m profit forecast in a company poll of analysts.
Average fares per passenger fell 15% in the quarter from a year earlier as the airline was forced to engage in "more price stimulation than we had previously expected," group chief executive Michael O'Leary said in a statement.
"While Q2 demand is strong, pricing remains softer than we expected, and we now expect Q2 fares to be materially lower than last summer (previously expected to be flat to modestly up)," Michael O'Leary said, referring to the July-September quarter when Ryanair typically makes most of its profit.
He said it was too early to forecast profit for the full financial year, which ends on March 31.
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The full year outcome remains subject to avoiding adverse developments during the year, especially given continuing conflicts in Ukraine and the Middle East, repeated Air Traffic Control short-staffing and capacity restrictions, or further Boeing delivery delays, the group CEO added.
Chief Financial Officer Neil Sorahan said he thought the weakness in fares was simply an issue of consumers being "a little bit more frugal, a bit more cautious."
"I think we've just had two years of double-digit (percentage) growth, both on fares and on traffic, and so there's a bit of push back," he said in an interview.
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Asked when the weakness might end, he said: "Who knows?"
The airline, Europe's largest by passenger numbers, has already seen its shares fall 24% from an April 8 peak, in large part due to fare weakness.
Ryanair said it would receive 20 fewer Boeing MAX aircraft than scheduled for its peak summer season, down from a backlog of 23 forecast in May.
But it said it had noted "an improvement in the quality and frequency of deliveries" from Boeing in recent months.
Neil Sorahan said he was "reasonably confident" that Boeing would recover the backlog and deliver the final 50 aircraft in time for next summer and that deliveries of the new, larger MAX 10 aircraft would start on schedule in 2027.
Ryanair said its passenger numbers in the three month period rose by 10% to 55.5 million, while its load factor - who many seats it fills on each flight - dipped by 1% to 94%.
Average fares during the period decreased by 15% to €41.93 from €49.07, it added.
Shares in the airline ended lower in Dublin trade today.
Meanwhile, shares in rivals Wizz and EasyJet were down more than 6%, while Aer Lingus and British Airways parent IAG and travel firm Tui were also among the biggest fallers in Europe.
