Amid rising fuel costs exacerbated by the ongoing conflict in the Middle East, Ryanair is contemplating a series of cost-saving measures to handle the financial strain. The European low-cost airline anticipates a substantial increase in its jet fuel bill, expecting it to climb by approximately €2 billion by the financial year ending March 2028. According to Chief Executive Michael O’Leary, high fuel prices might persist through 2027 unless the Middle East conflict sees a swift resolution.
Ryanair is exploring several strategies to mitigate these expenses, including potential pay freezes, a reduction in cabin crew numbers, and an increased reliance on artificial intelligence (AI) to enhance operational efficiency. The airline is also reassessing its labour agreements, airport charges, staffing levels, and other operational expenses. Some employee pay agreements, due for renegotiation from March, may face temporary freezes, which could lead to tensions with trade unions. The Unite union, however, expects Ryanair to honour its multi-year pay agreement covering 2027, noting that the deal is independent of the company’s financial performance.
The airline is also adjusting its recruitment strategy by slowing down the hiring of new pilots and cabin crew. Meanwhile, the use of AI-driven systems has already contributed to a 4% increase in aircraft capacity by optimizing flight scheduling and aircraft utilization.
Despite the rising costs, Ryanair reported a post-tax profit of €1.61 billion for the quarter ending in September, a 6% decrease compared to the same period last year, although passenger numbers rose by 5% to 64.5 million. The airline has successfully hedged 80% of its fuel needs until the end of March at $67 per barrel, but only 25% of its fuel requirements for the following 12 months are secured at roughly $95 per barrel.
To further address costs, Ryanair plans to introduce Boeing 737 MAX 10 aircraft starting in January. These new planes are expected to offer about 20% more seating capacity while consuming approximately 20% less fuel than the current fleet, potentially aiding in reducing overall operating costs.
Looking ahead, Ryanair anticipates that European short-haul airfares will rise significantly next year as the industry grapples with higher fuel expenses and the expiration of existing fuel-hedging deals. However, the airline is uncertain whether increased ticket prices will adequately offset the additional costs incurred.