Ryanair Holdings (cdi) (LON:0RYA) reported a sharp decline in first-quarter profit as lower fares and a spike in unhedged fuel costs offset higher passenger traffic, executives said during the company’s Q1 results presentation.
Group CEO Michael O’Leary said profit after tax fell 34% to EUR 538 million from EUR 820 million in the prior-year quarter. He attributed the decline mainly to two factors: the cost of the airline’s 20% unhedged fuel position doubled during the quarter, and average fares fell 6%.
Traffic Rises, But Fares Weigh on Revenue
Ryanair carried 61.3 million passengers in the quarter, up 6% year over year. Group CFO Neil Sorahan said the increase was helped by 29 additional “gamechanger” aircraft in the fleet, with all 210 of those aircraft operating during the quarter. Load factors were flat at 94%.
Scheduled revenue dipped 1% to EUR 2.91 billion as the traffic increase was offset by lower fares. Total revenue rose 1% to EUR 4.38 billion, supported by ancillary revenue, which Sorahan said increased 5% to EUR 1.47 billion. On a per-passenger basis, ancillary revenue was broadly flat at EUR 24.
Costs rose faster than revenue. Unit costs increased 5%, while total costs were up 11% to EUR 3.81 billion. Sorahan said the main driver was fuel, particularly the unhedged portion of the company’s fuel needs, where the price doubled to more than $150 per barrel.
Fuel Hedging Remains Central to Cost Strategy
O’Leary and Sorahan emphasized Ryanair’s hedging position as a key buffer against volatile energy markets. O’Leary said the company’s conservative hedging policy, under which 80% of FY 2027 jet fuel is hedged at $67 per barrel, “has insulated our earnings during this period of very volatile oil prices.”
Management said Ryanair has also begun hedging fuel for FY 2028. O’Leary said in his opening remarks that the airline had hedged the first 15% of FY 2028 fuel at $85 per barrel. Later in the presentation, he also referred to FY 2028 as “now 50% hedged at $85 a barrel.” In the Q&A portion, Sorahan stated that FY 2028 fuel was 15% hedged at $85 per barrel.
Sorahan also said FY 2027 operating expenses are 90% hedged at $1.15 to the euro, while the first half of FY 2028 is 30% hedged at $1.20 to the euro.
Balance Sheet Described as Debt-Free After Bond Repayment
Ryanair highlighted its balance sheet strength following the repayment of its final EUR 1.2 billion bond in May. O’Leary said the repayment leaves the group “essentially debt-free.” Sorahan described the balance sheet as a “fortress,” noting that Ryanair has 620 fully unencumbered Boeing 737 aircraft on its balance sheet.
At the end of June, Ryanair had more than EUR 2.8 billion in gross cash. O’Leary said that figure came after EUR 1.3 billion in debt repayments and EUR 500 million in capital expenditures. The company also has a EUR 1.1 billion revolving credit facility, which executives said is mostly undrawn.
Sorahan said the company is rated BBB+ by both Fitch and S&P. He said Ryanair’s balance sheet is a competitive advantage, particularly as other airlines take on more expensive debt and leases.
Management said the company is more than 90% through its EUR 750 million share buyback program and expects to complete it around the annual general meeting in September. Sorahan said Ryanair has bought back and canceled more than 25 million shares at an average price of EUR 26.35. The final dividend of EUR 0.195 per share is expected to be payable in September, subject to AGM approval.
MAX 10 Deliveries Seen as Key to Long-Term Growth
O’Leary said Boeing continues to expect certification of the MAX 10 in 2026 and has confirmed that Ryanair’s first 15 MAX 10 aircraft are expected to be delivered on time in spring 2027. Later in the presentation, O’Leary said Boeing was “pretty confident” the MAX 10 would be certified sometime in September or October, well ahead of the planned deliveries.
Ryanair has ordered 300 MAX 10 aircraft, which O’Leary said carry 20% more seats and burn 20% less fuel. He said the aircraft will support the company’s goal of growing traffic to 300 million passengers by FY 2034.
Sorahan said the aircraft should improve Ryanair’s unit costs across crew, airport and handling, maintenance and fuel. He also said the additional seats should support ancillary revenue growth by allowing the airline to carry more passengers per flight.
Management said European short-haul capacity is expected to remain constrained until at least 2030 as Boeing and Airbus remain behind on aircraft deliveries. Sorahan also cited Pratt & Whitney engine issues affecting A320 operators, ongoing consolidation in Europe and pressure on weaker carriers from oil prices and the U.S. dollar.
Outlook: Passenger Growth Target Maintained, Profit Guidance Withheld
Ryanair maintained its target to grow FY 2027 traffic by 4% to 216 million passengers. O’Leary said growth is expected to be stronger in the first half, at about 6%, and slower in the second half, at about 2%, as the airline reduces exposure to unhedged oil.
The company said Q2 fares are trending modestly lower year over year, with O’Leary describing the expected decline as low to mid-single digits. He said summer volumes remain strong, but the booking window is closer in than last year, limiting visibility.
Ryanair did not provide full-year profit after tax guidance. O’Leary said the company has “zero H2 visibility,” and Sorahan said full-year unit costs will depend heavily on the cost of unhedged fuel for the remainder of the year.
The company also said it is shifting capacity toward markets where governments and airports are reducing costs or offering growth incentives. O’Leary cited Slovakia, Albania, parts of Italy, Morocco and Sweden as examples, while saying capacity is being moved away from higher-cost or higher-tax markets such as Vienna, Berlin, Dublin and regional Spain. Ryanair opened new bases this summer in Rabat, Tirana and Trapani and has 130 summer 2026 routes on sale.
About Ryanair Holdings (cdi) (LON:0RYA)
Ryanair Holdings plc is a major European airline group known for operating low-fare passenger air services. Through its airline operations, the company provides scheduled flights across a broad network of domestic and international routes, serving leisure and business travelers throughout Europe and beyond.
The company is best known for its low-cost model, which centers on short-haul air travel and high aircraft utilization. In addition to passenger transport, Ryanair also offers ancillary services such as reserved seating, priority boarding, checked baggage, and onboard sales, which form an important part of its overall business.
Ryanair Holdings was founded in 1984 and grew from a small Irish airline into one of Europe’s largest carriers.
