Ryanair reported a significant drop in quarterly profit as rising fuel costs and consumer hesitancy linked to Middle East conflict weighed on the airline's financial performance.

Ryanair reported that its profit after tax for the April to June quarter dropped to 538 million euros, down from 820 million euros during the same period last year. The airline attributed the decline to an 11% rise in operating costs and a 6% decrease in ticket fares. CEO Michael O'Leary noted that consumer hesitancy, fueled by Middle East conflict and concerns over jet-fuel shortages, necessitated price stimulation.

Rising Costs and Fuel Exposure

Operating costs for the airline reached 3.81 billion euros during the quarter. Ryanair reported that 20% of its fuel was unhedged, leaving it exposed to price spikes as the cost of that fuel more than doubled. According to the International Air Travel Association's Jet Fuel Price Monitor, the average price of jet fuel reached $127 per barrel for the week ending July 10, representing a 41% increase from the previous year.

Market Outlook and Hedging Strategy

Despite the current challenges, CEO Michael O'Leary stated that the company's conservative hedging policy provides a cost advantage over EU competitors. For 2027, 80% of the company's jet fuel is hedged at $67 per barrel, with 15% hedged for 2028 at $85 per barrel. The airline has issued conservative guidance for the remainder of the financial year, noting that profit remains highly sensitive to geopolitical developments in the Middle East and Ukraine.