Ryanair Holdings PLC (LSE:RYA) is planning to increase flight prices over the next few months after it cut guidance for air traffic during the 2024 financial year, a first-quarter update revealed.
Fares in the summer will increase year on year by a low single digit, representing a slightly weaker spike than in the first quarter.
Michael O’Leary, the chief executive officer of the airline, claimed the price hike was a result of an increase in the headcount and pay of staff as well as a rise in the number of flight routes and several new aircraft delivery delays.
Guidance for traffic during the current financial year was cut from 185mln to 183.5mln, but it still represents a 9% increase annually after the Ukraine war negatively affected figures from the previous year.
Despite traffic forecasts falling, Ryanair is experiencing its “largest ever summer schedule” with up to 3,200 flights and more than 600,000 passengers expected daily.
An increase in travel to Asia, a rise in Americans visiting Europe and volatile oil prices are all believed to play a role in a reduction of short-haul European capacity.
Looking forward, Ryanair said it has little visibility for operations in the third quarter and none for the fourth.
O’Leary said: “Having enjoyed a bumper Christmas and New Year travel period last year (the first festive travel season that was not curtailed by the Covid pandemic), we are conscious that consumers may require some fare stimulation to fill our 25% greater seat capacity this winter following months of rising mortgage rates and consumer price inflation."
Ryanair posted profits after tax of €663mln in the first quarter of 2024, up from €170mln a year ago when the Ukraine war depleted sales.
Profits are expected to come in “modestly ahead” of last year's figures but with little visibility for the second half, an exact estimate can only be provided when the airline presents its interim results in November.
Ryanair shares sank over 3.5% in early Monday trading, having opened at almost €17.