Ryanair's profit slumped by almost half in its April-June quarter from a year earlier, falling well short of analysts' estimates as fares plunged 15% with management saying that ticket prices were continuing to deteriorate.
The warning by Europe's largest airline by passenger numbers underscores worries about a weaker-than-expected summer for airlines as a prolonged post-COVID travel boom wanes.
Ryanair shares opened 12% lower while rivals Wizz (WIZZ.L) and easyJet (EZJ.L) were down more than 6%. British Airways parent IAG (ICAG.L) and travel firm Tui (TUI1n.DE) were among the biggest fallers in Europe.
"Fares are now moving materially lower than the prior year and pricing ... continues to deteriorate," Chief Executive Michael O'Leary said in a video presentation.
Efforts to boost fares in recent weeks failed as consumers resisted, he added.
After-tax profit for the three months to the end of June, the first quarter of Ryanair's financial year, was 360 million euros ($392 million), down 46% on the same period last year and well below the 538 million euro profit forecast in a company poll of analysts.
Average fares per passenger fell 15% from a year earlier as the airline was forced to engage in "more price stimulation than we had previously expected", O'Leary said in a statement. He said fares in the current quarter were expected to be "materially lower" than last summer rather than "flat to modestly up" as forecast in May.
"We expect significant downside risk to consensus estimates," Liberum analyst Gerald Khoo said in a note. "More aggressive pricing by the market leader is likely to result in adverse fallout for the other European airlines."
Ryanair's shares were at 14.43 euros at 0750 GMT, down almost one-third from an April 8 all-time high of 21.62 euros.
SOFTNESS TO CONTINUE
Fares in the July-September quarter, when European airlines typically make most of their profit are "softer, trending towards materially lower", Chief Financial Officer Neil Sorahan said.
Consumers are being "a little bit more frugal, a bit more cautious," he said in an interview.
Asked when the weakness might end, he said: "Who knows?"
It is far too early to forecast profit for the full financial year, which ends on March 31, he added.
Ryanair said it would receive 20 fewer Boeing (BA.N) 737 MAX aircraft than scheduled for the peak summer season, down from a backlog of 23 forecast in May.
But it said it had noted "an improvement in the quality and frequency of deliveries" from the company in recent months.
Sorahan said he was "reasonably confident" that Boeing would recover the backlog and deliver the final 50 aircraft in time for next summer and that deliveries of the new, larger MAX 10 aircraft would start on schedule in 2027.
($1 = 0.9184 euros)
