Ryanair CEO Michael O'Leary expects European airfares to rise by 10%, maybe 20%, next year as the airline's fuel hedges roll off. The carrier's first-half profit fell 15%, and it is launching a cost review that includes a potential temporary pay freeze.
Ryanair CEO Michael O'Leary told CNBC on Monday that European airfares are set to rise "significantly" next year as the airline's fuel hedges expire. He said he believes fares will rise by 10%, maybe even 20% across Europe.
Profit falls as unhedged fuel cost doubles
The budget carrier's profit fell 15% to 2.15 billion euros ($2.3 billion) in the first fiscal half of the year, as the price of its 20% unhedged jet fuel doubled. Ryanair had hedged 80% of its jet fuel at $67 per barrel for the year.
According to CNBC, O'Leary said: "very significant cost cliff we’re all facing next year". He put jet oil at $170 a barrel and said there is still no resolution in the Middle East.
Airline weighs pay freeze and cost review
Ryanair does not expect higher short-haul fares to fully offset an estimated 2-billion-euro increase in fuel charges next year. It is therefore launching a cost review that includes lowering crew rations, a potential temporary pay freeze and the use of AI to drive further efficiencies.
The BBC reports that the airline expects fuel prices to stay high "well into 2027" unless there is a "swift resolution" to the conflict. The BBC also says aviation fuel prices have surged this year because the war in the Middle East has reduced the supply of refined products from the Gulf.
Winter capacity stays flat
In September, Ryanair cut its full-year traffic target from 216 million passengers to 214 million to reduce its exposure to unhedged fuel during the winter. It now expects traffic between November and March to remain broadly flat year-on-year.
For 2028, the carrier has hedged at least 25% of its jet fuel at $95 per barrel.
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