Ryanair has announced it will review staff pay freezes and implement material fare increases as it faces a projected €2 billion ($2.2 billion) surge in fuel costs for the next financial year. The Dublin-based budget airline reported a 15% decline in post-tax profits to €2.15 billion for the six months ending September 30, attributing the drop primarily to elevated jet fuel prices driven by the ongoing Middle East conflict.
Immediate measures and financial impact
The airline confirmed it is evaluating temporary pay freezes for staff, reducing crew-to-passenger ratios, and expanding the use of AI to improve operational efficiency. Ryanair’s CEO, Michael O’Leary, stated that fares would need to rise by 10-20%—or roughly €10 per passenger—to fully offset the additional costs, though he expressed skepticism that such increases would be fully achievable. "We need about a 20% increase in airfares... I am not sure we will see 20%," O’Leary said during an earnings call.
The company has hedged 80% of its fuel costs at approximately $67 per barrel through March 2025, but the remaining 20% has doubled to around $130 per barrel, exacerbating financial strain. Ryanair also reduced its annual passenger traffic target from 216 million to 214 million for the coming winter season to mitigate unhedged fuel exposure.
Long-term fuel price outlook and industry response
Ryanair warned that jet fuel prices are expected to remain elevated well into 2027 unless there is a swift resolution to the Middle East conflict. The airline’s fuel bill for the year ending March 2028 is forecast to increase by €2 billion, with O’Leary describing the situation as a "very significant cost cliff" for the industry. He predicted that European airfares would rise by 10-20% in 2025 to reflect higher fuel expenses, though he acknowledged this may not fully cover the additional costs.
The company’s revenues grew 3% to €10.08 billion during the reporting period, driven by a 6% increase in passenger numbers, but operating costs surged 10% to €7.69 billion, primarily due to fuel expenses. Ryanair’s pre-tax profits fell 16% to €2.4 billion over the same period.
Operational adjustments and efficiency measures
In addition to fare increases and potential pay freezes, Ryanair is exploring lower crew ratios and greater reliance on AI to streamline back-office and support functions. The airline has not yet confirmed whether unions representing its workforce will accept these measures. Unite, the union representing Ryanair employees, has not publicly responded to requests for comment.
The budget carrier’s hedging strategy, which previously insulated it from fuel price volatility, is now expiring, leaving it more exposed to market fluctuations. O’Leary emphasized that the airline would need to "do whatever we can to survive this" as it navigates the prolonged period of high fuel costs.