TLDR
- Ryanair’s Q1 net income fell 34% to €538m, missing analyst forecasts by 7%
- Average fares dropped 6% year-on-year as Middle East conflict deterred bookings
- Unhedged fuel costs more than doubled due to US-Israel strikes on Iran
- Q2 fares now expected to be “modestly lower” than last year, worse than prior guidance
- Morgan Stanley kept its “overweight” rating with a €27.60 price target
Ryanair stock dropped more than 5% on Monday after the airline reported a steep fall in first-quarter profits and cut its fares outlook for the summer.
Net income came in at €538 million for the April-to-June quarter, down 34% from €820 million a year earlier. That missed the analyst consensus of €579 million and came in well below Morgan Stanley’s estimate of €639 million.
Revenue rose just 1.1% year-on-year to €4.43 billion, slightly below the consensus forecast of €4.48 billion.
Ryanair Q1 2026 Earnings
– Rev. EU4.38B (est EU4.45B)
– Profit After Tax EU538M (est EU623.5M)
– Customers 61.3M, +5.9% Y/Y
– Load Factor 94% (est 94.4%)
– Still Sees FY Customers 216M (est 216.94M)— LiveSquawk (@LiveSquawk) July 20, 2026
The main drag was fares. Average fares fell 6% in the quarter — steeper than what Ryanair had previously guided — as travellers held off booking due to geopolitical tensions in the Middle East.
CEO Michael O’Leary pointed to two key factors on the earnings call: “The principal cause of this was the price of our 20% unhedged fuel doubled in the quarter and fares fell 6%, primarily, we think, due to the impact of the Middle East conflict.”
Fuel Costs Bite
When the US and Israel launched strikes against Iran in February, jet fuel prices jumped sharply. Ryanair had hedged most of its fuel requirements, but the unhedged portion — around 20% — more than doubled in cost during the quarter.
Crude oil hit $90 a barrel briefly after a weekend of intense US-Iran exchanges, before easing slightly. Traffic through the Strait of Hormuz, a key route for global oil supply, has largely stalled.
An interim peace deal last month gave some brief relief to energy prices, but those gains unwound as negotiations broke down and fighting resumed.
Non-fuel costs per passenger actually came in 1.5% below consensus, and the load factor held steady at 94%, showing planes were still flying full.
Outlook and Boeing Update
Ryanair now expects Q2 fares to be “modestly lower” than a year ago, walking back its earlier guidance for fares to be broadly flat. O’Leary described the anticipated decline as “something low to mid single digits.”
The airline kept its full-year traffic forecast intact, expecting passenger numbers to rise 4% to 216 million.
On costs, Ryanair dropped its previous guidance for mid-single-digit unit cost inflation. It now says the outcome depends on unhedged fuel price movements, which analysts had been forecasting at 1%-2% growth.
CFO Neil Sorahan highlighted Ryanair’s widening cost gap over rivals. He said the unit cost gap with Wizz Air has grown from 26% before COVID to over 81% now, and the gap with easyJet has widened from around 70% to approximately 150%.
On Boeing, O’Leary said MAX-10 certification is expected “sometime in September or October,” with the first 15 aircraft due for delivery in spring 2027. Ryanair has hedged 60% of its 150 MAX-10 order against euro-dollar movements at just above 1.23.
Morgan Stanley expects full-year consensus net income to drop from roughly €2.1 billion to around €1.9 billion following the results, but kept its “overweight” rating and €27.60 price target.
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