Ryanair Hit Hard by New Earnings Report

Budget airline Ryanair (RYA) experienced a 17% stock drop on Monday following its quarterly earnings report which showed a nearly 50% profit decrease.

The airline earned $392 million in profit for its most recent quarter, which is a major drop from where it was from the same time last year. This is the first quarterly report for the fiscal year for Ryanair, and it places the company in a tough position with its shareholders.  

Ryanair shares fell Monday after the company said its quarterly profit after tax had fallen 46% and fares will be lower than expected in the summer months.

The company discussed why its earnings were so much lower, which were mainly due to cheaper fares as well as a profitable Easter season that ended before the last quarter.

The company managed to boost its overall passenger count by about 10% for the quarter. The airline is also operating a very busy schedule this summer, which could help it make back some of the revenue it needs for the stock to remain healthy. Ryanair has just opened 200 more routes and has established bases in five additional cities.

Does This Mean Stock Will Increase?

Investors need to be aware of a statement from the company’s CEO Michael O’Leary, who said that the fares were probably going to be cheaper for the next three months. That could result in an even lower quarter next time or one that is about on par with the current quarter. The good news is that because this quarter’s profits are so low in comparison to this time last year, they could look decent by the next quarter.

O’Leary says it is too early to call results for the 3rd and 4th quarters of the year, but the 2nd quarter, during the summer, is looking soft right now. O’Leary expects to be able to provide investors with guidance from the remainder of the fiscal year by November.