Ryanair considers pay freezes and reducing crew on flights as fuel costs soar

Ryanair is considering cost-cutting measures including implementing pay freezes, reducing crew on flights and increasing the use of AI to offset soaring fuel costs because of the Middle East conflict.

Europe’s biggest low-cost carrier said it expects European airlines to raise their ticket prices by as much as 20%, as it anticipates its jet fuel costs will increase by about €2bn (£1.6bn) in its next financial year, which ends in March 2028.

“Unless there is a swift resolution of the Middle East conflict we expect jet fuel prices to remain elevated well into 2027,” said Michael O’Leary, the chief executive of Ryanair. “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.”

The oil price hit a six-month high last Friday but fell on Monday to about $110 a barrel.

Ryanair said it expects European short-haul fares will “increase materially” next year as a result, as the oil hedging deals taken out by airlines to reduce costs come to an end.

“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,” O’Leary said.

The company said the AI drive would be focused on “further operational and back office/support functions” productivity.

Ryanair said its fuel requirements through to the end of March remain 80% hedged at $67 a barrel.

The company’s hedges for the following 12 months are 25% hedged at $95 a barrel.

The Irish airline, Europe’s largest in terms of passenger numbers, said that average fares fell by 2% year on year in the quarter to the end of September. Ryanair added that fare prices in the final three months of the year were trending “modestly ahead” of the same quarter last year.

“The booking window remains closer-in which reduces visibility,” the company said.“[The current quarter’s] fare outcome will heavily depend on the strength of close-in October-November school midterm [holiday] and Christmas bookings.”

The airline reported a post-tax profit of €1.61bn in the quarter to the end of September, a fall of 6% year on year but in line with analyst expectations. Passenger numbers grew 5% year on year to 64.5 million for the quarter.