Ryanair is exploring cost-cutting measures, including potential pay freezes and staff reductions, to manage increasing fuel expenses exacerbated by the Middle East conflict. The airline anticipates its fuel bill to rise by around €2 billion by the end of March 2028, with CEO Michael O’Leary highlighting the possibility of prolonged high fuel prices if the conflict persists.
The airline forecasts a significant increase in European short-haul airfares next year as fuel expenses climb and existing hedging agreements expire, though it doubts that higher ticket prices will fully offset the additional costs. In response, Ryanair is reviewing various cost-reduction strategies, including labor agreements and operational expenses. Some employee pay agreements slated for renegotiation from March may face temporary freezes, potentially leading to tensions with trade unions.
The Unite union, representing some Ryanair employees, has emphasized that it holds a multi-year pay agreement through 2027 and expects the airline to honor existing commitments, irrespective of financial performance. Alongside slowing the recruitment of new pilots and cabin crew, Ryanair is also leveraging artificial intelligence to enhance operational efficiency, reporting a 4% increase in aircraft capacity through improved scheduling and utilization.
Ryanair has hedged 80% of its fuel needs until the end of March at $67 per barrel, but only 25% for the subsequent 12 months at about $95 per barrel. Despite the rising operating costs, the airline reported a post-tax profit of €1.61 billion for the quarter ending in September, a 6% decline from the previous year, while passenger numbers increased by 5% to 64.5 million.
The airline plans to introduce Boeing 737 MAX 10 aircraft starting in January, which promise a 20% increase in seating capacity and approximately 20% less fuel consumption compared to its current fleet, potentially aiding in cost reduction efforts.