Ryanair has said it is considering pay freezes and increased use of AI to help offset a surge in fuel costs next year.
The Dublin-based airline expects jet fuel prices to “remain elevated well into 2027” because of the continued conflict in the Middle East. The company currently has around 80% of its jet fuel hedged at much lower prices than the market rate, but this protection will fade out following the end of the financial year.
Fuel bill forecast to rise by €2bn
As a result, Ryanair said it is currently predicting a jump of roughly two billion euros (£1.7 billion) in its fuel bill for the year to March 2028. It expects European short-haul airfares to “increase materially” to reflect higher fuel prices, but this is not likely to fully offset the increase.
Chief executive Michael O’Leary told Sky News that he expects European flights to see “double-digit” price increases next year as fuel costs feed through to travellers. He said: “I don’t believe higher fares will be enough, so we will be taking out airport costs, aircraft costs too. We will have to do whatever we can to survive this.”
Cost review targets labour and AI
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. Ryanair will also review the “increased use of AI to drive further operational and back-office and support functions productivity”.
The announcement 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.
Operating costs climb and traffic target cut
The firm saw operating costs lift 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.
Mr O’Leary 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.”
