Ryanair Shares Plunge on Steep Decline in Q1 Profits

The U.K.-listed shares of European budget airline Ryanair Holdings (GB:0A2U) plunged more than 17%, as of writing, after the company reported a 46% decline in its profit after tax to €360 million for the first quarter of Fiscal 2025 (ended June 30, 2024).

Results reflected the impact of lower-than-anticipated fares. The news dragged down the stocks of the other European airlines. Shares of Wizz Air (GB:WIZZ) and EasyJet (GB:EZJ) fell about 10% and 8%, respectively.

Ryanair’s Weak Q1 Results  

Ryanair’s total revenue for Q1 FY25 fell 1% year-over-year to €3.63 billion. The 10% growth in traffic to 55.5 million was offset by a 15% decline in fares compared to the prior-year quarter and the timing of the Easter season.

The first-quarter bottom line was also impacted by an 11% rise in operating costs to €3.26 billion, as the savings from fuel hedging were more than offset by increased staff and other costs. Some of these costs were partly related to Boeing (BA) delivery delays.

Ryanair ended the quarter with €1.74 billion in net cash, marking an increase from €1.37 billion as of the end of FY24.

Ryanair’s Poor Outlook

Ryanair expects pricing to deteriorate further in Q2 FY25. CEO Michael O’Leary cautioned that the airline now expects Q2 FY25 fares to be significantly lower than last summer. The company had previously expected the fiscal second quarter fares to be flat to slightly up.   

The carrier reaffirmed its full-year FY25 traffic growth outlook of 8%, provided the Boeing deliver delays situation does not worsen. Overall, management’s commentary indicated the waning of the post-COVID boom in travel demand.  

Is Ryanair a Good Stock to Buy Now?

Ryanair stock has a Moderate buy consensus rating based on one Buy and one Hold recommendation. The average Ryanair stock price target of $155 implies about 36% upside potential.

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