![Passengers board a Ryanair flight](https://media.guim.co.uk/d75e77a97da698c8e3b739425889bc7bcb6d0645/0_381_5642_3386/1000.jpg)
Ryanair has said its profits plunged by almost half between April and June and warned that fares this summer would be “materially lower” than last year.
Europe’s largest airline reported profits of €360m (£303m) in the spring quarter, 46% lower than the same period last year, despite passenger numbers rising 10% to 55.5 million.
The downbeat results, which missed analysts’ estimates, drove the budget carrier’s share price down 17% on Monday.
The news also appeared to have a knock-on effect on other publicly traded airline stocks. EasyJet fell 7%, Wizz Air was down 10% and IAG, the owner of British Airways and Iberia, slipped 3.4%.
The shares were also under pressure after airports and airlines around the world were hit by a Microsoft IT outage on Friday that led to the cancellation of more than 5,000 flights.
Ryanair said its average fare dropped from €49.07 to €41.93 year on year, but the increase in passenger numbers helped limit the decline in total revenues to 1% at €363bn.
The company said while it expected strong demand this summer, with passenger numbers likely to be up 8% overall this financial year, “pricing remains softer than we expected”.
“We now expect second-quarter fares [July to September] to be materially lower than last summer,” the company said. “The final first-half outcome is, however, totally dependent on close-in bookings and yields in August and September.”
“Close-in bookings” refer to customers waiting much longer than usual to book summer flights.
“Cheaper air fares are great for travellers but bad for airlines trying to repair their finances after the pandemic,” said Dan Coatsworth, an investment analyst at AJ Bell. “It puts more pressure on airlines to put bums on seats and fill planes to maximise the revenue potential. While travel demand has bounced back since the pandemic, travellers are reluctant to book too far ahead. That’s possibly because they are feeling the pressure of persistent high interest rates or because they are holding out for a bargain.”
The Ryanair chief executive, Michael O’Leary, said the 15% drop in average fare prices in its last quarter may be a “rebalancing” of the market after double-digit percentage ticket price increases in recent years.
He added that Ryanair had experienced repeated resistance from customers when it had tried to put up prices, and intended to aggressively market low-cost ticket availability to keep demand high.
This month Jet2, the Leeds-based travel company that flies from 12 UK airports to more than 65 destinations in Europe, said customers faced “modest” price rises this summer as it adjusted to the shift to later bookings.
Ryanair also said on Monday that it had been hit by air traffic control capacity, which had been restricted by various factors including strikes abroad and increasing gaps between planes to ensure safe landings during extreme weather.
“In the last 10 days of June, we suffered a significant deterioration in European air traffic control capacity, which caused multiple flight delays and cancellations, especially on first-wave morning flights,” said O’Leary, who added that this was the worst summer for air traffic control delays that he had ever experienced.
“[This makes it] more urgent than ever that the new European Commission and parliament deliver long-delayed reform of Europe’s hopelessly inefficient air traffic control services,” he said.
Coatsworth said that the more holidaymakers saw and read about problems with international travel, the more likely it was that they would opt to book a UK break instead.
“The more people read about delays and cancellations, the more likely a chunk of potential last-minute bookers aren’t going to bother,” he said. “They might think it’s all too much hassle so they just have a holiday at home. To make matters worse, there is the prospect of the airline industry potentially taking the rest of the week to recover from the global IT meltdown.”