DUBLIN (Reuters) – Ryanair reported a 46 percent drop in first-quarter after-tax profit on Monday and warned that summer fares will be “materially lower” than last year.

Ryanair’s after-tax profit for the first quarter to the end of June was 360 million euros, well below expectations of 538 million euros, according to the consensus published by the airline.

Average fares per passenger fell 15% in the quarter from a year earlier as the airline was forced to make deeper-than-expected alignments, Chief Executive Michael O’Leary said in a statement.

“While demand is strong in the second quarter, prices remain lower than expected, and we now expect second quarter fares to be materially lower than last summer (previously seen as flat to slightly higher),” O’Leary said, referring to the July-September quarter when Ryanair typically makes most of its profits.

He added that it was too early to predict profits for the full financial year.

Chief Financial Officer Neil Sorahan said the low rates were simply because consumers were “a little more frugal, a little more cautious.”

“I think we’re coming off two years of double-digit (percentage) growth, both in fares and in traffic, and so there’s a little bit of a pullback,” he said in an interview.

The Irish airline, Europe’s largest by passenger numbers, has already seen its shares fall 24% since peaking on April 8, largely because of low fares.

Ryanair has said it expects to delay the delivery of 20 Boeing 737 MAX aircraft for the summer season compared to a forecast of 23 aircraft in May, with Neil Sorahan saying he is “reasonably confident” that Boeing will be able to catch up and deliver the last 50 aircraft in time for next summer.

(Reporting by Conor Humphries; Editing by Kate Entringer; by Mathias de Rozario)

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