Ryanair weighs lower crew ratios and pay freezes as fuel bill rises

Ryanair’s fuel hedge covers 80% through March but 25% for another year

Ryanair is weighing fewer crew members on flights as it reviews all costs across its group airlines after jet-fuel prices rose amid the Middle East conflict. Chief executive Michael O’Leary laid out the scope of the review. “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. He said several pay deals would come up for renegotiation from March.

The Unite union said it had not received notice of any pay-freeze proposal. “Unite hasn’t been advised of any such proposals and we have a multiyear pay deal in place which covers next year,” said Oliver Richardson, a national officer at the union. Richardson said a number of unions across Europe had similar multiyear deals. Ryanair had emphasized that Unite’s agreement was neither attached to nor dependent on company performance, Richardson said, and he expected it to be honored.

Ryanair was also “slowing down hiring meaningfully” for new pilots, cabin crew and across its training courses, O’Leary said. The company said its increased use of AI would focus on productivity in operations and in back-office and support functions. O’Leary said AI had already been used to increase capacity by 4%.

“When you’re running 650 aircraft, it’s too big for a human to be able to do it,” O’Leary said. “The machines can actually design the schedules better than we know [how to do], so we are getting more productivity out of the aircraft.”

Ryanair expected European airlines to raise ticket prices by up to 20%, while its own European short-haul fares were expected to increase materially in 2027 as fuel-hedging deals taken out by airlines to reduce costs were expiring. The Irish low-cost carrier, Europe’s largest by passenger numbers, forecast its jet-fuel costs to rise by about €2bn (£1.6bn) in the 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,” O’Leary said. “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.”

Oil prices hit a six-month high on Friday before falling to about $110 a barrel on Monday. Ryanair said 80% of its fuel requirements until the end of March were hedged at $67 a barrel, while 25% of its requirements for the subsequent 12 months were hedged at $95 a barrel. “It’s beginning to dawn on everybody that we [the industry] are not well hedged,” O’Leary said.

Ryanair said average fares fell 2% year on year in the quarter ending in September. Fares in the final three months of the year were trending “modestly ahead” of the same quarter a year earlier. “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 post-tax profit of €1.61bn for the quarter ending in September, a 6% decline from a year earlier but in line with analyst expectations. Passenger numbers grew 5% year on year to 64.5 million during the quarter.

Ryanair has taken delivery of about 30 aircraft annually over the past two years, but the delivery rate is set to drop to 15 annually for the next few years. The airline said it was to take deliveries of the Boeing 737 Max 10 aircraft in January. Ryanair said the Max 10 has about 20% more seats but burns a fifth less fuel than its current fleet.