Ryanair is contemplating pay freezes and staff reductions as part of a strategy to manage rising fuel costs exacerbated by the ongoing Middle East conflict. The European low-cost airline anticipates a significant increase in its jet fuel bill, estimated to rise by approximately €2 billion for the financial year ending March 2028, according to CEO Michael O’Leary. He noted that fuel prices could remain elevated throughout 2027 unless the conflict is swiftly resolved.
To counteract these rising expenses, Ryanair is considering several cost-cutting measures, including reviewing labor agreements, airport charges, staffing levels, and operational expenses. Some employee pay agreements set for renegotiation from March could face temporary freezes, potentially leading to tensions with trade unions. The Unite union, however, stated it has a multi-year pay agreement in place covering 2027, which it expects Ryanair to honor, independent of the airline’s financial performance.
The airline is also slowing the recruitment of new pilots and cabin crew while increasing its use of artificial intelligence (AI) to boost operational efficiency. Ryanair reports that AI-powered systems have already enhanced aircraft capacity by 4% through improved flight scheduling and aircraft utilization.
Ryanair expects European short-haul airfares to rise significantly next year as airlines face higher fuel expenses and existing fuel-hedging agreements expire. However, the company believes that increased ticket prices may not fully offset the additional costs. Currently, Ryanair has hedged 80% of its fuel requirements until the end of March at $67 per barrel, but only 25% of the following 12 months’ needs are secured at approximately $95 per barrel.
Despite the financial pressures, 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, while passenger numbers rose by 5% to 64.5 million. The airline also plans to take delivery of Boeing 737 MAX 10 aircraft starting in January, which are expected to offer around 20% more seating capacity while consuming approximately 20% less fuel than its current fleet, potentially aiding in cost reduction.