Ryanair projects two billion euro fuel bill rise

Ryanair is preparing for a substantial increase in fuel expenses, predicting its bill will rise by roughly two billion euros (£1.7 billion) for the financial year ending in March 2028. The Dublin-based carrier attributes this surge to the ongoing conflict in the Middle East, which it says will keep jet fuel prices elevated well into 2027. To counteract these rising costs, management is considering temporary pay freezes, reduced crewing ratios, and an expanded role for artificial intelligence in operational and back-office functions.

The airline currently has approximately 80% of its jet fuel hedged at rates lower than the current market price. However, these protective measures will expire as the current financial year concludes. Once the hedges fade, the company expects the full impact of market rates to hit its bottom line. Ryanair stated that European short-haul airfares will increase materially to reflect these higher input costs, though ticket price hikes alone will not fully offset the financial strain.

Financial results for the half-year ending in September showed a 15% drop in profit after tax, which fell to 2.15 billion euros (£1.79 billion). Revenues rose by 3% to 10.08 billion euros (£8.41 billion), driven by a 6% increase in passenger numbers. Conversely, operating costs climbed by 10% to 7.69 billion euros (£6.42 billion) over the same period. Earlier this year, the company lowered its annual traffic target from 216 million to 214 million passengers to mitigate the impact of unhedged fuel costs.

Michael O’Leary, the group’s chief executive, noted that while third-quarter demand remains strong, the booking window is closing in, reducing visibility for the airline. He stated that fares are trending modestly ahead of the same quarter last year. O’Leary emphasized that the outcome for the third quarter will depend heavily on the strength of bookings for the October and November school mid-term period and Christmas.

The executive added that the company has zero visibility for the fourth quarter at this stage of the year. Consequently, it is too early to provide meaningful guidance for full-year 2027 profit after tax. The review of labor agreements and operational productivity through AI is part of a broader effort to manage costs as the airline navigates the shift from hedged to market-rate fuel prices.