Ryanair weighs pay freezes and smaller crews as fuel bill set to rise

Ryanair is considering temporary pay freezes, fewer crew members on flights and wider use of artificial intelligence as it seeks to absorb higher fuel costs linked to the Middle East conflict. The Irish carrier is examining spending across its group airlines, with labour agreements and airport negotiations among the areas under review.

Europe’s biggest low-cost airline expects its jet fuel bill to rise by about €2bn, equivalent to £1.6bn, in its next financial year, which ends in March 2028. It forecasts that European airlines could increase ticket prices by as much as 20%, although it does not expect higher fares to cover the full increase in its fuel spending.

Chief executive Michael O’Leary said fuel prices were likely to stay high well into 2027 unless the Middle East conflict was resolved quickly. He expects significantly higher European short-haul fares as airlines respond to rising fuel expenses and reductions in competitors’ capacity. Oil reached a six-month high last Friday before falling to around $110 a barrel on Monday.

The airline expects the expiry of fuel hedging agreements, which airlines use to limit costs, to contribute to higher short-haul fares next year. Ryanair has hedged 80% of its fuel requirements through the end of March at $67 a barrel. For the subsequent 12 months, it has hedged 25% at $95 a barrel.

O’Leary said the spending review would place particular emphasis on airport negotiations, labour agreements approaching renewal, lower crew ratios and expanded use of AI. Temporary pay freezes could form part of the response as labour deals mature. The company said its AI plans would target productivity improvements in operations and back-office and support functions.

The warning about future price increases came as Ryanair reported that average fares had fallen 2% from a year earlier in the quarter ending in September. For the final three months of the calendar year, however, fares were running slightly above the level recorded in the same period last year.

Ryanair said passengers continued to book nearer to their departure dates, making the outlook harder to assess. It said fares for the current quarter would depend heavily on late bookings for the October and November school midterm holidays and the Christmas period.

The airline, Europe’s largest by passenger numbers, reported post-tax quarterly profit of €1.61bn for the period ending in September. That was 6% below the previous year’s result but matched analysts’ expectations. Passenger traffic increased despite the profit decline, rising 5% year on year to 64.5 million.