Ryanair shares down as airline warns of fare pressure despite profit beat

Investing.com -- Ryanair Holdings Plc (IR:RYA) shares fell more than 2% on Monday as the airline warned that tougher year-over-year fare comparisons and external risks could pressure results in the second half, even after reporting a 42% rise in first-half profit to €2.54 billion, about 1.6% above forecasts.

Revenue for the first half rose 13% to €9.82 billion as passenger traffic increased 3% to 119 million and average fares climbed 13% to €58. 

Operating profit grew 42% to €2.86 billion. The load factor held steady at 95% for the half and rose one percentage point to 96% in the second quarter.

Second-quarter profit after tax was €1.72 billion, up 20% from €1.43 billion a year earlier. 

Quarterly revenue rose 8% to €5.48 billion, with scheduled revenue up 9% and ancillary revenue up 5%. Average fares in the quarter increased 7% and passenger numbers rose 2%.

Operating costs fell 3% year over year in the quarter to €3.53 billion, including a 2% decline in fuel costs to €1.51 billion. 

Ex-fuel costs per passenger were up 1.9%. Ryanair said full-year unit cost inflation is expected to remain modest, mitigated by fuel hedging and cost controls, although higher air traffic control and environmental charges are anticipated.

Ryanair said it hedged about 85% of its jet-fuel needs for the second half of fiscal 2026 at $76 a barrel and 80% of fiscal 2027 at just under $67 a barrel. 

Analysts at RBC Capital Markets said this locks in more than 10% fuel price savings next year compared with current market levels.

The airline declared an interim dividend of €0.193 per share, payable in late February 2026, and said it repurchased more than 7 million shares for €188 million under its €750 million buyback program launched in May. 

Net cash stood at €1.5 billion at Sept. 30, compared with €2 billion at the end of the first quarter and €1.3 billion at the end of fiscal 2025, reflecting €1.1 billion in capital spending, €1.2 billion in debt repayments and €188 million in share repurchases.

Ryanair reaffirmed that fiscal 2026 traffic is now expected to grow more than 3% to 207 million passengers, up from previous guidance of 206 million. 

Third-quarter forward bookings are slightly ahead of last year, and the company now expects to recover all of last year’s full-year fare decline.

RBC said Ryanair’s updated forecast for traffic and fares slightly firmed post the first-half results and should support modest consensus earnings upgrades. 

However, it noted that the airline’s guidance highlighted continuing challenges for second-half fare growth and limited visibility into the fourth quarter, with results dependent on close-in Christmas and New Year bookings.

Ryanair said the full-year outcome remains exposed to external risks, including conflicts in Ukraine and the Middle East, macroeconomic pressures and repeated air traffic control disruptions in Europe.