22nd Jul 2024 09:18
(Alliance News) - Downbeat guidance from Ryanair Holdings PLC put London-listed peers on the back foot as well in morning trade on Monday, with the travel sector grappling with "normalised demand", according to analysts at Davy.
Ryanair said quarterly profit nearly halved, as revenue declined slightly due to lower ticket prices despite carrying more passengers. The weakness in fares is expected to continue throughout the summer, it warned.
The Dublin-based budget airline reported pretax profit of EUR400.8 million for the three months that ended June 30, down 46% from EUR740.7 million a year before.
Total operating revenue was EUR3.63 billion, down 0.6% from EUR3.65 billion. Ancillary revenue - for example from onboard food and drink sales - grew by 10% to EUR1.30 billion from EUR1.18 billion, but scheduled revenue from ticket sales declined by 5.9% to EUR2.33 billion from EUR2.47 billion.
"While Q2 demand is strong, pricing remains softer than we expected, and we now expect Q2 fares to be materially lower than last summer," Chief Executive Officer Michael O'Leary said in a statement.
Davy analysts noted Ryanair had previously predicted second-quarter fares would be "flat to modestly up".
The Irish broker added: "The market appears to be going through some volatility. If last year the buzzword was 'revenge travel', then this year it would appear to be more 'normalised demand'."
Davy cut its net income estimate for Ryanair's financial year by 15% to EUR1.72 billion. Ryanair achieved post-tax profit of EUR1.92 billion in the year that ended this past March, a rise of 46% from EUR1.31 billion.
Ryanair shares plunged 13% in Dublin in morning trade.
In London, shares in easyJet PLC fell 6.4%, while Wizz Air Holdings PLC shed 5.9%. International Consolidated Airlines Group SA lost 3.1%.
Jet2 PLC, meanwhile, fell 4.7%, though analysts at Liberum noted a recent update from the AIM listing did not have the bearish fare warning that Ryanair's did.
Liberum added: "We expect an adverse read across [from Ryanair] to the other European airlines, although we find it curious that Jet2 noted no such weakness at its FY results less than two weeks ago."
By Eric Cunha, Alliance News news editor
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