Profit After Tax: EUR820 million, up from EUR360 million in the prior year Q1. Passenger Traffic: Increased by 4% to 58 million passengers. Average Fares: Increased by 21%. Revenue per Passenger: Rose by 15%. Ancillary Revenues: Up 3% on top of 4% traffic growth. Unit Cost Inflation: Up just 1%. Operating Costs: Rose 1% per passenger. Net Cash: Increased by EUR2 billion. Fleet Expansion: 181 Gamechanger aircraft, an increase of 25 aircraft from June 2024. Fuel Hedging: FY26 almost 85% hedged at $76 a barrel; 36% of FY27 hedged at just under $66 a barrel. Traffic Growth Forecast: Expected to grow 3% to 206 million passengers in FY26.

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Release Date: July 21, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Ryanair Holdings PLC (NASDAQ:RYAAY) reported a strong Q1 profit after tax of EUR820 million, a significant increase from EUR360 million in the prior year. Traffic grew by 4% to 58 million passengers, with a 21% increase in average fares. Revenue per passenger rose by 15%, and ancillary revenues increased by 3% on top of the 4% traffic growth. The company maintained excellent unit cost control, with unit cost inflation rising by just 1%. Ryanair Holdings PLC (NASDAQ:RYAAY) is well-hedged for fuel costs, with FY26 almost 85% hedged at $76 a barrel, providing a 13% saving for FY27.

Negative Points

Traffic growth is being constrained by Boeing's delivery delays, impacting the company's ability to expand further. Operating costs rose by 1% per passenger due to increased ATC fees and higher environmental costs. The company faces external risks such as terrorism, tariff wars, and macroeconomic shocks, which could impact future performance. Ryanair Holdings PLC (NASDAQ:RYAAY) has limited visibility for the second half of the year, with only 6% of seats sold. The company is exposed to potential adverse developments, including European ATC strikes and mismanagement, which could affect operations.

Q & A Highlights

Q: How do you think the tariff situation will play out, and what is needed for you to lock in the attractive dollar rate on future aircraft deliveries? A: Michael O'Leary, Group CEO, believes tariffs are unlikely but could be short-lived if imposed. Ryanair has fixed price agreements with Boeing, who would be liable for tariffs. Neil Sorahan, CFO, mentioned that clarity from auditors on hedge accounting is needed to lock in the dollar rate for future aircraft deliveries.

Q: What is Ryanair's stance on the cabin baggage regulations and capacity adjustments in certain regions? A: Michael O'Leary stated that the EU Parliament's suggestion on baggage has no legal status and is impractical. Ryanair supports defining a free carry-on bag size. Regarding capacity, Ryanair is reallocating from regions with high costs, like Germany, to more competitive areas such as Sweden and Hungary.

Story Continues

Q: Can you comment on the better-than-expected close-in pricing in Q1 and the unit cost inflation for the full year? A: Michael O'Leary noted stronger close-in pricing due to less discounting and improved OTA distribution. Neil Sorahan expects modest unit cost inflation between 1% and 3% for the full year, depending on spot fuel prices and the final schedule.

Q: How do you view the competitive environment in Central and Eastern Europe with Wizz Air's capacity changes? A: Michael O'Leary considers Wizz Air a high-cost competitor and believes Ryanair's cost advantage will prevail. He expects Wizz Air's strategy to compete in Central and Eastern Europe will highlight Ryanair's cost and price advantages.

Q: What is Ryanair's approach to cash returns to shareholders given the current financial position? A: Michael O'Leary stated that Ryanair has a share buyback program of EUR750 million running until mid-2026. The company is focused on maintaining a strong balance sheet to address bond repayments and potential opportunistic CapEx, with a commitment to return excess cash to shareholders.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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