Ryanair CEO Warns Europe's 'Flaky' Airlines May Not Survive If Oil Stays High

Ryanair Holdings plc (NASDAQ:RYAAY) on Monday reported fiscal year 2026 profit after tax before exceptional items of 2.26 billion euros, up 40% year over year, as revenue increased 11% to 15.54 billion euros, driven by stronger fares and passenger growth. The company’s fourth-quarter EPS loss of 86 cents beat analyst estimates of 95 cents, while quarterly revenue of $2.942 billion exceeded estimates of $2.890 billion, according to Benzinga Pro. Traffic And Revenue Growth Passenger traffic rose 4% to 208.4 million despite delays in deliveries of 29 Boeing Co. (NYSE:BA) B-8200 aircraft. Scheduled revenue climbed 14% to 10.56 billion euros as fares increased 10%. Ancillary revenue rose 6% to 4.99 billion euros, or 24 euros per passenger. Profit And Cost Performance GAAP profit attributable to shareholders increased 35% to 2.17 billion euros from 1.61 billion euros a year earlier. Basic IFRS EPS rose 41% to 2.0594 euros, while operating profit jumped 52% to 2.37 billion euros. Operating costs before exceptional items rose 6% to 13.09 billion euros. Ryanair booked an 85 million euro provision tied to an Italian AGCM fine that it plans to appeal. Maintenance expenses increased 16% due to higher aircraft utilization and engine-related costs, while staff costs rose 6%. Cash Flow And Balance Sheet Operating cash flow totaled 3.69 billion euros in fiscal 2026. Gross cash stood at 3.6 billion euros at year-end, while net cash reached 2.1 billion euros. The company spent 1.9 billion euros on capital expenditures and repaid 1.2 billion euros in debt. It also returned more than 900 million euros to shareholders through dividends and share buybacks. Ryanair said it expects to repay its final 1.2 billion euros in bonds in May, leaving the group “effectively debt free.” FY27 Outlook Looking ahead, Ryanair expects fiscal 2027 traffic to grow 4% to approximately 216 million passengers. Ryanair said 80% of its fiscal 2027 jet fuel requirements are hedged at about $67 per barrel, below last year’s levels, while prices for the remaining unhedged 20% have surged due to the Middle East conflict. The airline warned that elevated fuel prices linked to the Middle East conflict, higher environmental taxes, rising maintenance expenses, and macroeconomic uncertainty could weigh on margins and pricing visibility. During the earnings call, CEO Michael O'Leary said some of “our flaky competitors" might not survive the winter if high fuel prices persist. Fuel Market And Industry Outlook Ryanair said it does not expect jet fuel supply shortages despite disruptions linked to the ongoing Iran war, citing improving supply alternatives outside GCC oil producers. The airline said April-to-June fares are expected to decline by mid-single-digit percentages, while July-to-September fares are projected to remain broadly flat. However, Ryanair warned unit costs could rise further if jet fuel prices remain elevated. RYAAY Price Action: Ryanair shares were up 4.95% at $56.00 at the time of publication on Monday, according to Benzinga Pro data. Image by Markus Mainka via Shutterstock