Ryanair is considering a range of cost-cutting measures as fuel prices rise amid the Middle East conflict, including possible temporary pay freezes, lower crew ratios and greater use of artificial intelligence across its operations and support functions.
Michael O’Leary, Ryanair’s chief executive, said the airline expected jet fuel prices to remain high well into 2027 unless the conflict was resolved quickly. The company forecasts that its fuel bill will increase by about €2bn in the financial year ending in March 2028.
Ryanair expects European airlines to raise ticket prices by up to 20%, with short-haul fares likely to increase significantly as existing fuel-hedging agreements expire and some competitors reduce capacity. O’Leary said higher fares would probably not fully compensate for Ryanair’s additional fuel costs.
The airline said it was reviewing costs across the group, including negotiations with airports, labour agreements, staffing levels and the use of AI. The technology initiatives will focus on improving productivity in operational, administrative and support activities.
Oil prices reached a six-month high on Friday before falling to about $110 a barrel on Monday. Ryanair has hedged 80% of its fuel requirements through the end of March at $67 a barrel, while 25% of its needs for the following 12 months are hedged at $95 a barrel.
Average fares fell 2% year on year in the quarter ending in September, although fares for the final three months of the year were trending modestly above those of the same period last year. Ryanair said the shorter booking window made demand more difficult to predict and that the quarter’s performance would depend heavily on October and November school-holiday bookings, as well as Christmas demand.
The airline reported a post-tax profit of €1.61bn for the September quarter, down 6% year on year but in line with analyst expectations. Passenger numbers rose 5% to 64.5 million.
Sources: The Guardian Business.