Ryanair Holdings (cdi) Q1 Earnings Call Highlights

Key Points

• Ryanair’s Q1 profit fell sharply, with profit after tax down 34% to EUR 538 million as lower average fares and higher unhedged fuel costs outweighed a 6% rise in passenger traffic.
• Revenue and costs moved in opposite directions: total revenue rose 1% to EUR 4.38 billion, helped by 5% growth in ancillary revenue, but total costs jumped 11% as fuel prices spiked on the airline’s unhedged exposure.
• The airline kept its traffic growth target but withheld full-year profit guidance, citing weak fare visibility and volatile fuel costs, while continuing to emphasize its strong balance sheet and fuel hedging strategy.

Ryanair Holdings cdi) (LON: 0RYA reported a sharp decline in first-quarter profit, as higher unhedged fuel costs and the timing of Easter weighed on results, while management said fares are trending weaker than previously expected for the current quarter.

Group Chief Executive Michael O'Leary said profit after tax for Q1 FY 2027 fell 34% to €538 million from €820 million a year earlier. He attributed the decline primarily to a spike in oil prices affecting the company's 20% unhedged fuel exposure, as well as the fact that the first half of the Easter holiday fell into the prior year's fourth quarter.

Traffic rose 6% to 61.3 million passengers, while revenue per passenger fell 5%. Average fares were down 6%, and ancillary revenue per passenger was flat. Scheduled revenue declined 1% to €2.91 billion, as the increase in traffic was offset by lower fares.

Fuel Hedging and Costs

O'Leary said unit costs rose 5% in the quarter, which he described as "an impressive number" given that unhedged Q1 jet fuel prices doubled to $151 per barrel. Chief Financial Officer Neil Sorahan said unit costs excluding fuel were up 2% in the quarter and pointed to continued cost control across the business.

Ryanair remains 80% hedged on jet fuel through March 2027 at $67 per barrel. O'Leary said the company recently extended hedging into FY 2028, covering 15% of the year at about $85 per barrel. Sorahan said the main swing factor for the rest of the year will be where the remaining 20% unhedged fuel exposure prices out.

Management said the company expects full-year ex-fuel unit cost inflation to remain below mid-single digits, though Sorahan said a 3% to 4% assumption would be more prudent than 2% to 3% for modeling purposes. Ryanair cited higher EU and environmental taxes, crew pay increases under collective labor agreements and higher maintenance costs as cost pressures for the year.

Pricing Outlook Weakens

O'Leary said summer volumes remain strong, but the booking window is closer in than last year, reducing visibility. He said Q2 pricing is now trending down by low- to mid-single digits year over year, a downgrade from the company's previous hope that pricing would be broadly flat.

"The final H1 fare outcome remains heavily dependent on the strength of close-in bookings in August and September," O'Leary said, adding that close-in demand would not be enough to offset fare discounting already done earlier in the booking cycle.

In the question-and-answer session, O'Leary said August was about 75% booked against the final expected number, while September was about 40% booked. He said Ryanair has no meaningful visibility for the second half of the year and therefore is not providing full-year profit after tax guidance.

The company still expects FY 2027 traffic to grow 4% to 216 million passengers. O'Leary said growth is front-loaded, with first-half traffic expected to rise 6%, while second-half growth is expected at 2% as schedules are reduced into winter.

Balance Sheet and Shareholder Returns

Ryanair said it repaid its final €1.2 billion bond in May using internally generated cash flow, leaving the group "essentially debt-free." O'Leary said gross cash at quarter-end was just over €2.8 billion, after €1.3 billion of debt repayments and €500 million in capital expenditure. The group also has a €1.1 billion revolving credit facility, which Sorahan said is mostly undrawn.

O'Leary said Ryanair is about 90% through its €750 million share buyback program, at an average price of €26.35 per share. He said the company's funding priorities over the coming year include Boeing MAX 10 aircraft capital expenditure, dividends, completing the current buyback around the annual general meeting in September, and rebuilding gross cash toward €4 billion.

Sorahan said Ryanair is not targeting a specific gearing level. Instead, he said the company intends to rebuild cash and return surplus cash to shareholders where appropriate, while taking on debt opportunistically depending on cost.

Fleet, Routes and Capacity Allocation

O'Leary said Boeing continues to expect MAX 10 certification in late summer 2026, with Ryanair's first 15 delivery slots protected for spring 2027. He said the company is increasingly confident it will have the first aircraft ahead of summer 2027. Ryanair has 300 MAX 10 aircraft due for delivery by March 2034, which O'Leary said will offer 20% more seats per flight and burn 20% less fuel.

The airline is operating three new bases this summer: Rabat in Morocco, Tirana in Albania and Trapani in southern Italy. O'Leary said Ryanair is operating more than 130 new routes and is shifting scarce capacity toward countries, regions and airports that lower aviation taxes or fees to encourage growth.

He cited Albania, Morocco, regional Italy, Slovakia and Sweden as markets receiving more capacity. Ryanair is reducing capacity in higher-cost markets including Vienna, Dublin, Germany and regional Spain. O'Leary said the Berlin base will close at the end of the summer.

Management said it expects European short-haul capacity to remain constrained until at least 2030 because aircraft manufacturers remain behind on deliveries. O'Leary said those constraints, combined with Ryanair's cost position, balance sheet and aircraft order book, support the company's target of carrying more than 300 million passengers by 2034.

Regulation, Dublin Airport and Recent Events

O'Leary welcomed Irish legislation enabling the transport minister to lift the Dublin Airport passenger cap, but said the cap should be abolished rather than increased incrementally. He also welcomed provisional recommendations from the Irish Aviation Authority to cut Dublin Airport fees from summer 2027, saying Ryanair would add 2 million seats at Dublin next year if the recommendations are implemented.

O'Leary also criticized proposed European Union changes related to emissions trading and carry-on baggage pricing, saying they would make European aviation less competitive or require airlines to advertise fares that include services many passengers do not use. Ryanair executives said expected changes to carry-on bag advertising would likely be revenue neutral for the company.

The company also addressed a recent Thessaloniki aircraft incident involving a fan blade issue and depressurization. O'Leary said the U.S. National Transportation Safety Board is leading the investigation and has released the aircraft back to Ryanair. He said one passenger suffered minor injuries and a pregnant passenger was taken to hospital, with both since released. Initial indications suggest possible foreign object damage to the engine on takeoff, though O'Leary said that has not been definitively established.

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.

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