SerpApi.Org
Ryanair’s profits fell by more than a third in the three months to June as the Iran war doubled jet fuel prices and hit demand.
The low-cost airline said on Monday it was being forced to cut fares to encourage bookings for the summer, as the fallout from the conflict drags on.
Ryanair revealed that earnings before tax sank to €538m (£457m) from €820m in the last quarter after operating costs jumped 10pc to €3.81bn.
It is the first major carrier in Europe to report earnings since the start of the conflict in the Gulf.
Neil Sorahan, Ryanair’s chief finance officer, blamed the drop-off largely on the fact that a fifth of its jet fuel was unhedged, meaning the airline had not fixed an agreed price for it.
He said: “The big swing factor was our unhedged fuel, which doubled. There’s a big difference between the two numbers.
“And there was a bit of concern in people’s minds around the availability of fuel. That led to some hesitancy and a bit more stimulation on fares.”
Ryanair was forced to cut ticket prices by 6pc on average to help fill its planes, and Mr Sorhan said reductions are still necessary even for the approaching peak summer season.
“Bookings are still coming close in, and fares are trending moderately down,” he said.
“To be honest, we don’t have the visibility into what close-in August and September bookings are going to be, and that will ultimately determine where the fare ends up.
“We’ve got visibility until the first week or so of August, but beyond that the close-in people haven’t made their decision yet.”
Reports of four-hour delays and people missing flights at the EU border because of the implementation of the new entry/exit system, which requires fingerprinting and facial scans, may also be affecting bookings, he said.
He said: “It’s an extra difficulty for people this summer. The strong message is that people need to get to their airport earlier.
“It’s been badly managed by Europe; they should have deferred it into the autumn.”
Mr Sorahan said the recent heatwave had also held back demand, though he predicted that those who had stayed at home to soak up the sun would still ultimately travel.
“We’ve seen this before,” he said. “We’ve had warm summers where people stay at home early and then at the last minute book into August and September.”
Meanwhile, Mr Sorahan said he welcomed news that the US authorities will take over the investigation into the recent blowout of a window on one of its planes from the Greek authorities.
The near-tragedy is believed to have happened after it was hit by debris from an engine.
“There are a number of avenues that they are going to explore, and we look forward to seeing the outcome of their independent investigation,” he said.
