Ryanair reports 15% drop in half-year profit

Ryanair reported a post-tax profit of €2.15 billion for the first six months of its financial year, a 15% decrease from the previous period. The airline attributed the decline to rising operating costs and a 3% drop in revenue per passenger.

Neil Sorahan, Ryanair's chief financial officer, explained the financial results on Breakfast Business with Joe Lynam. He noted that the Middle East conflict influenced travel patterns. While total traffic increased by 6% to 126 million passengers, average fares fell by 4%. Sorahan cited consumer hesitancy and last-minute booking trends as primary drivers for the lower ticket prices.

Fuel expenses played a major role in the reduced profit margin. The unhedged price of fuel doubled to $130 per barrel. Although 80% of the airline's fuel was hedged at $67 per barrel, the surge in the remaining portion caused overall costs to rise by 10%. Sorahan described the result as a strong performance given the volatile market conditions.

The airline is preparing to introduce new aircraft to mitigate future costs. Michael O'Leary suggested last month that fares might increase next summer. However, Sorahan highlighted the arrival of 16 new planes by the summer of next year, which is one more than originally planned. These aircraft are expected to arrive as early as January or February.

The new jets offer two main advantages. They are 20% more fuel efficient and include 20% more seats than current models. Sorahan stated that the airline purchased the aircraft at attractive prices following the pandemic. The additional capacity should improve productivity and help offset fuel expenses.