Ryanair’s H1 profit -15%; FY28 fuel is the real hit

Ryanair's H1 profit after tax fell 15% to €2.15bn on fares down 4% and unit costs up 5%. The bigger number is in FY28, when Ryanair expects a fuel bill about €2bn higher. Ancillary revenue was €3.08bn, up 6%. Second-quarter profit after tax was €1.61bn, down 6% from € 1.72 bn. Ryanair filled the same 95% of seats, carried 6% more people, and earned less per passenger. Revenue per passenger fell 3% to about €80. Costs per passenger rose about 5% to about €61. Both figures come from our math on the reported totals. Revenue less operating costs fell from about €2.86bn to about €2.39bn, down 16%. The margin on that measure slid from about 29% to about 24%. Compared with the US: JetBlue's average fare rose 19.2% in 3Q26, and Delta's unit revenue rose 15.4%. Those carriers held capacity near flat, as we wrote in capacity discipline. JetBlue grew 2.3%, and Delta was flat. Ryanair grew traffic 6% and cut fares. Two different markets, two very different choices. But, based on the data we have on Allegiant's MAX 8-200, Ryanair's aircraft must be driving its fuel efficiency equally well. Ryanair MAX 8-200 The slide is easing. Our math puts first-quarter profit after tax at €0.54bn against €0.82bn, down 34%. The second quarter fell 6%. Ryanair says 3Q fares are trending modestly ahead of last year, but bookings are closer in. It has no visibility on 4Q. Ryanair's fuel hedge is why this half was only down 15%. The unhedged 20% of jet fuel roughly doubled to about $130 a barrel. FY27, which runs to March 2027, is 80% hedged at about $67. That's why FY28 is the problem. Ryanair has covered only 25% at about $95. At current forward prices, it puts the extra fuel bill at about €2bn. That is roughly a full half-year of today's profit. The comparison is ours, not Ryanair's. It is clearly a bet that the Iran/Hormuz crisis will be over by then. The release gives no FY27 profit guidance. It cites the Middle East, Ukraine, fuel, macro shocks and ATC disruption. Ryanair also warns that FY28 may need temporary pay freezes, after significant crew increases under new multi-year deals. Gross cash was €2.6bn at 30 September. That is after €1.3bn of debt repayments, €0.8bn of capex and €0.4bn of shareholder distributions. Ryanair repaid its last €1.2bn bond in May and keeps a BBB+ rating. It has 620 unencumbered 737s. The airline still plans a new €800m buyback from February 2027, running about ten months. The interim dividend is €0.273 a share. The €750m buyback completed in September retired about 28.6m shares, or about €26 each, based on our calculations. The new buyback equals about 31% of gross cash, also our math. CEO Michael O'Leary said: "This financial strength widens the cost gap between Ryanair and our competitors." Perhaps. Ryanair's own unit costs rose 5%, and its fares fell 4%. The gap to rivals may be widening. The gap to last year narrowed. Traffic follows the same logic. The FY27 target is cut to 214m passengers from 216m, and winter traffic is expected to be flat. Ryanair also absorbed a further €300m of EU environmental taxes, per the release. It is moving capacity out of Austria, Germany and regional Spain toward Albania, Italy, Morocco, Slovakia and Sweden. FY28 traffic is targeted above 220m. Ryanair Boeing 737 MAX 10 Ryanair says the FAA has certified the MAX 10 and expects EASA to follow before year-end. Its first 16 deliveries are due in spring 2027. Boeing told investors last week it expects to deliver about 30 built MAX 7 and MAX 10 aircraft in 2027. We have an idea of how many of those are Ryanair's. We don't know which flight-management software they will carry. Southwest and United told Boeing they don't want the current version. Ryanair's release is silent on it. But Ryanair will likely follow the others on this. The release also says the two big OEMs are behind on production targets and that Pratt & Whitney delays continue. That matches what Airbus said on its own call. Engines pace the A320 family, which is the hill in Hill 281. Ryanair's fuel bill in euros, net debt and ex-fuel unit costs. The release doesn't give them. We also don't have Ryanair's view on the MAX 10 software, and we don't have 3Q booking figures. Our read of the release came through a text extraction, so verify the hedge percentages and prices against the original before publishing. Unhedged fuel doubled, and profit fell 15%. Three-quarters of FY28 fuel is still unpriced.

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