Iran War Sinks Ryanair Profits 34%

The Ryanair group's pre-tax profits dropped sharply as war in the Middle East sent jet fuel prices soaring and customers reluctant to book flights. And this is not the only problem: the price of fuelling a plane has jumped since the US and Israel launched strikes against Iran in February. The Irish airline’s pre-tax profits dropped 34% to €593m (£503m) between April and June while sales were flat as the company was forced to cut fares to stimulate demand. Ryanair also said it expects summer fares to be slightly lower than last year due to “consumer hesitancy” around air travel. The price of fuelling a plane has jumped since the US and Israel launched strikes against Iran in February and while Ryanair said it had “hedged” or struck deals for the most future fuel costs, those not included in these arrangements had more than doubled.

Crude oil prices hit $90 (£67) a barrel for the first time in a month on Monday, before falling back slightly, after a weekend of intense exchanges of fire between the US and Iran. Traffic through the Strait of Hormuz — an essential route for global oil and gas supplies — has ground to a halt. An interim peace deal last month brought some respite to oil and energy prices, but they spiked again as negotiations broke down and fighting resumed. The airline warned that its results for the year will be “highly sensitive” to external factors such as conflict escalation in the Middle East and Ukraine as well as the price of unhedged jet fuel.

Between April and June, Ryanair’s revenue ticked up 1% to €4.4bn. While passenger numbers rose 6% to 6.1 million- helped by the Easter holiday in April – fares fell by 6% as the airline reduced fares to entice flyers concerned about the Iran war. Ryanair’s share price fell 5% on Monday. Russ Mould, investment director at AJ Bell, said Ryanair was in a better position than many of its rivals, but nonetheless “visibility is worse than San Francisco airport when the fog sets in.” “The renewed escalation in hostilities in the Middle East is unhelpful and without a lasting resolution, challenging times for the airline and travel space look set to continue,” he said.

The Ryanair group has had to cut fares to stimulate demand with fares falling by 6% between April and June. Neil Sorahan, Ryanair's finance chief, said flights on its popular Mediterranean routes were still full. “People [are] as keen to get away as ever, albeit booking just a little bit later,” he said. Between April and June, Ryanair’s revenue ticked up 1% to €4.4bn. While passenger numbers rose 6% to 6.1 million- helped by the Easter holiday in April – fares fell by 6% as the airline reduced fares to entice flyers concerned about the Iran war.

Ryanair also expects summer fares to be slightly lower than last year as consumers are hesitant about booking flights due to the Iran conflict. The impact of the Iran war on Ryanair profits is not limited to the UK alone, with many African countries having trade and economic ties with the Middle East. Although Ryanair is an Irish airline, it operates in several African countries including Ghana.