Ryanair slumps after quarterly profit miss, fares warning

Investing.com - Ryanair stock slumped Monday after the budget carrier reported a sharp fall in quarterly profit, and warned that fares this summer would be “materially lower” than last year.

At 07:55 ET (11:55 GMT), Ryanair stock fell over 14% to €14.00, down over 26% so far this year.  

Europe’s largest airline reported profits of €360 million (€1 = $1.0886) in the spring quarter, 46% lower than the same period last year, despite passenger numbers rising 10% to 55.5 million.

Chief executive Michael O’Leary said on Monday that he expected the drop in fares seen during the spring to be sustained. The airline had previously forecast that fares would be “flat to modestly up.”  

Ryanair was facing “weaker than expected” consumer spending and that “the pricing environment continues to deteriorate as we move into the summer peak,” O’Leary said. 

“Results have missed consensus and 2Q fare commentary implies scope for further downgrades,” said analysts at RBC Capital Markets, in a note.

That said, “Ryanair still expects traffic to grow 8% to 198m to 200m passengers in FY25, and for FY25 unit costs to rise modestly as ex-fuel costs are substantially offset by fuel hedge savings and rising interest income,” RBC noted.

The Canadian bank maintained an ‘overweight’ rating, with a target price of €24.

“We see longer term attractions to Ryanair's low-cost, and relatively high-margin (and so high ROCE/ ROIC) business model. We see FCF yields stepping up to >10% by FY26E as capex steps down, leaving scope for further shareholder returns,” RBC said.