Ryanair is implementing a sweeping cost-cutting plan, freezing pay and scaling back hiring to mitigate the impact of a €2bn increase in jet fuel costs next year. The budget airline expects to raise fares by double-digit percentages but must find additional savings to offset financial pressures from the Iran conflict. Chief executive Michael O’Leary stated the company is slowing down hiring meaningfully, with reductions in new pilot and cabin crew recruitment.
The airline has several pay deals needing renegotiation from March, which it may not renew if fuel prices remain high. Shares have fallen by about a quarter since the start of the year, with pre-tax profits dropping 16% to €2.4bn for the first half of the fiscal year. Operating costs rose 10% due to the conflict, causing hesitancy among passengers.
Ryanair has hedged 80% of its fuel needs for the 12 months to March 2027 but warned the entire industry faces significantly higher costs until at least 2028. The airline has hedged only a quarter of its fuel needs for the year ending March 2028 at approximately $95 per barrel, compared to $67 for the current year. Aircraft deliveries will drop from 30 per year to 15 over the next couple of years, with the introduction of more fuel-efficient Boeing 737 MAX 10 aircraft beginning in January.
The airline plans to expand AI use to improve scheduling and productivity, having already increased capacity by 4%. Ryanair also announced cuts to unprofitable winter flights, lowering its passenger forecast from 216 million to 214 million for the fiscal year.
Source: Financial Times Companies · Summarized by HeadlinesBriefing