Ryanair Weighs Pay Freezes and Leaner Crews as Fuel Bill Set to Jump €2bn

Ryanair expects its jet fuel bill to rise by about €2bn (£1.6bn) in its next financial year, and it's weighing pay freezes, lower crew ratios and more AI to absorb the hit.

Europe's largest low-cost carrier by passenger numbers laid out the measures on Monday as the Middle East conflict keeps oil prices elevated. The Dublin-based airline also predicted European carriers will raise ticket prices by up to 20%. The forecast covers Ryanair's financial year ending March 2028.

CEO Michael O'Leary didn't mince words about the pressure. "Unless there is a swift resolution of the Middle East conflict we expect jet fuel prices to remain elevated well into 2027," he said.

What's driving the squeeze?

Oil hit a six-month high on Friday before easing to about $110 a barrel on Monday. Ryanair's hedges — the deals airlines use to lock in fuel prices — are expiring at exactly the wrong moment.

The numbers tell the story plainly:

• 80% of Ryanair's fuel needs until the end of March are hedged at $67 a barrel.
• The following 12 months? Only 25% hedged, at $95 a barrel.

That gap between $67 and $95, spread across Europe's biggest passenger airline, is the €2bn problem. Ryanair expects European short-haul fares to "increase materially" next year as competitors face the same expiring hedges. But O'Leary was blunt that higher fares won't cover it all.

"While we believe European short-haul fares will increase materially to reflect these much higher jet-fuel prices and competitor capacity reductions, this is unlikely to provide a full offset for an estimated €2bn increase in our fuel bill," he said.

Where does Ryanair cut?

O'Leary sketched four cost fronts. "To help address this, we're reviewing all costs across group airlines with a particular focus on airport churn negotiations, maturing labour agreements (which may require temporary pay freezes), lower crew ratios and increased use of AI," he said.

The AI push, according to the company, would target productivity in operations, back-office and support functions — not, for now, anything customer-facing. Airport charges and labour deals are the other battlegrounds, with the airline flagging that some pay freezes may only need to be temporary.

The takeaway: even Europe's most aggressive cost-cutter thinks it can't price its way out of this fuel spike alone.

How did the last quarter go?

Ryanair posted a post-tax profit of €1.61bn for the quarter ending in September — down 6% year on year, but in line with analyst expectations. Passenger numbers grew 5% to 64.5 million over the same period.

Fares were softer. Average fares fell 2% year on year in the September quarter. The final three months of the year are trending "modestly ahead" of the same quarter last year, the airline said.

Visibility, though, is limited. "The booking window remains closer-in which reduces visibility," Ryanair said. "[The current quarter's] fare outcome will heavily depend on the strength of close-in October-November school midterm [holiday] and Christmas bookings."

In plain terms: Ryanair won't know how the quarter lands until holiday travellers actually book.

What happens next?

Two things will decide whether the €2bn estimate holds: the trajectory of the Middle East conflict and oil prices, and whether European consumers absorb fare hikes of up to 20% without cutting trips. Ryanair has until March, when its cheap $67-a-barrel hedges run out, to settle its airport, labour and AI cost plans.