Ryanair has warned that jet fuel prices will not come down over the next year and that increased air fares may not be enough to offset rising costs. The budget airline said it is considering pay freezes and increased use of AI to help offset a surge in fuel costs next year.
The company expects jet fuel prices to “remain elevated well into 2027” amid the conflict in the Middle East. Ryanair currently has around 80% of its jet fuel hedged at much lower prices than the market rate, but this will expire at the end of the financial year.
Projected fuel bill jump
As a result, the airline is predicting a jump of roughly two billion euros (£1.7 billion) in its fuel bill for the year to March 2028. Ryanair said it expects European short-haul airfares to “increase materially” to reflect higher fuel prices, but this is not likely to fully offset the increase.
Bosses added that the group is therefore reviewing all costs, with a focus on areas such as labour agreements, which could lead to temporary pay freezes, and lower crewing ratios. The Irish airline will also review the “increased use of AI to drive further operational and back-office and support functions productivity”.
Half-year financial results
The warning came as the company revealed that profit after tax fell by 15% to 2.15 billion euros (£1.79 billion) for the half-year to September, compared with a year earlier. Revenues increased by 3% to 10.08 billion euros (£8.41 billion), driven by a 6% increase in passenger numbers.
However, the firm saw operating costs rise by 10% to 7.69 billion euros (£6.42 billion) for the period. Earlier this year, Ryanair said it would cut its traffic target for the year from 216 million passengers to 214 million in an effort to offset increases in unhedged fuel costs.
Outlook from the chief executive
Michael O’Leary, chief executive of the business, said: “While third-quarter demand is strong, with fares trending modestly ahead of the same quarter last year, the booking window remains closer in, which reduces visibility.
“The third-quarter’s fare outcome will heavily depend on the strength of close-in October/November school mid-term and Christmas bookings.
“As is normal at this time of year, we have zero Q4 visibility. It therefore remains too early to provide meaningful full-year 2027 profit-after-tax guidance.”
