Ryanair has issued a stark warning to passengers about rising air fares, attributing the pressure to soaring fuel costs and economic uncertainty triggered by the ongoing Iran war. The budget airline reported a recent weakening in ticket prices, which it directly links to the Middle East conflict.
Price Forecast Downgraded
The Irish carrier now expects a mid-single digit percentage decline in fares for the first quarter ending in June. For the summer months of July to September, Ryanair has adjusted its projections, predicting prices will remain "broadly flat"—a downgrade from its earlier forecast of a low single-digit increase.
Chief Executive Michael O'Leary explained: "Pricing in recent weeks has eased somewhat in response to economic uncertainty caused by higher oil prices, the fear of fuel shortages, and the risk of inflation adversely impacting consumer spending."
Fuel Hedging and Cost Risks
Ryanair revealed it has secured pricing for 80% of its jet fuel needs. However, the cost of the remaining 20% has "spiked" due to the Middle East conflict. The airline cautioned that if prices remain at current levels, its costs could jump by a "mid-single digit" percentage in the 2026-27 financial year.
Mr O'Leary noted that European airlines are sourcing jet fuel from alternative countries to overcome the supply shock caused by Iran's blockade of the Strait of Hormuz. He stated: "The conflict in the Middle East has created economic uncertainty, and we still don't know when the Strait of Hormuz will reopen. Despite this, Europe remains relatively well supplied with jet fuel, with significant volumes sourced from West Africa, the Americas, and Norway."
Financial Performance and Outlook
Ryanair posted a 40% rise in underlying after-tax profits to €2.26 billion (£1.96 billion) for the year to March 31, slightly better than expected. Pre-tax profits rose 36% to €2.42 billion (£2.1 billion). However, the group said it was "far too early" to provide an outlook for the new financial year due to uncertainty over demand and fuel prices.
Like other airlines, Ryanair noted that bookings are increasingly being made at the last minute, though demand remains "robust." The airline expects to carry 4% more passengers in the year to March 2027, reaching 216 million, matching the 4% growth seen in 2025-26.
CEO Contract Extension
Ryanair added that the board and Mr O'Leary are close to finalising the terms of his contract extension for another four years from the end of March 2028. The proposal includes granting Mr O'Leary 10 million share awards, dependent on "very ambitious profit after tax or share price growth targets." The airline stated: "These discussions have almost concluded, and engagement with the group's largest institutional shareholders will commence in the coming days."
