Ryanair is contemplating a series of cost-cutting measures, including pay freezes and reductions in cabin crew, as it grapples with rising fuel costs exacerbated by the ongoing conflict in the Middle East. The European low-cost airline anticipates its jet fuel expenses could surge by roughly €2 billion by the financial year ending March 2028, according to Chief Executive Michael O’Leary. He cautioned that fuel prices might remain elevated through 2027 unless the geopolitical situation improves.
To address these financial pressures, Ryanair is evaluating various cost-reduction strategies, including reassessing labor agreements and operational expenses. Pay agreements set for renegotiation from March could face temporary freezes, potentially leading to tensions with trade unions. The Unite union, which has a multi-year pay agreement with Ryanair covering 2027, expects the airline to honor its commitments, noting that the agreement is not contingent on the company’s financial performance.
Ryanair is also slowing the recruitment of new pilots and cabin crew while increasing its reliance on artificial intelligence to boost operational efficiency. The airline reports that AI-powered systems have already enhanced aircraft capacity by 4% through improved flight scheduling and aircraft utilization.
Despite these challenges, Ryanair posted a post-tax profit of €1.61 billion for the quarter ending in September, a 6% decrease from the same period last year, while passenger numbers rose by 5% to 64.5 million. The airline plans to introduce Boeing 737 MAX 10 aircraft starting in January, which are expected to offer approximately 20% more seating capacity and consume about 20% less fuel than its current fleet, potentially helping to curb operational costs.
The airline has hedged 80% of its fuel requirements until the end of March at $67 per barrel, though only 25% of its needs for the subsequent 12 months are secured at approximately $95 per barrel. As existing fuel-hedging agreements expire, Ryanair predicts that European short-haul airfares could rise significantly next year as airlines contend with higher fuel expenses.