Dublin-based budget carrier Ryanair announced on Monday that it plans to raise ticket prices and initiate a cost-cutting campaign to cushion the impact of surging jet fuel expenses stemming from conflict in the Middle East. Chief Executive Michael O'Leary cautioned that airfares across Europe could see double-digit percentage increases next year as fuel expenditures mount.
The announcement accompanied the release of the airline's financial results for the second quarter ending in late September. Ryanair, Europe's largest airline by passenger volume, reported a 6 percent decline in post-tax profits to 1.61 billion euros compared to the same period last year. Despite the profit dip, quarterly revenue rose 4 percent to 5.7 billion euros, while passenger traffic climbed 5 percent. However, average fares fell 2 percent during the quarter, driven by consumer hesitancy and delayed bookings linked to the ongoing war.
Looking ahead to the upcoming financial year, Ryanair projects its total fuel bill will surge by 2.0 billion euros ($2.24 billion). To address these mounting expenses, the low-cost carrier is considering several cost-saving measures, including temporary pay freezes, reduced cabin crew ratios, and an expanded implementation of artificial intelligence within back-office operations. Ryanair has already indicated plans to trim its winter flight schedule in response to elevated fuel costs.
Rising costs are largely driven by unhedged fuel exposure amid the US-Iran conflict. For its current fiscal year ending in March, Ryanair has hedged 80 percent of its fuel demands at approximately $67 per barrel, significantly below prevailing market rates. However, for the 2027–2028 financial year, only 25 percent of its fuel needs are hedged, locked in at a higher rate of roughly $95 a barrel. O'Leary warned in an earnings statement that "unless there is a swift resolution of the Middle East conflict, we expect jet-fuel prices to remain elevated well into 2027."
In a video commentary released alongside the second-quarter report, O'Leary noted that European travelers should expect industry-wide price adjustments, stating, "We're certainly looking at double-digit (percentage) fare increases across Europe from all airlines in 2027." Market analysis echoed these concerns. Dan Coatsworth, head of markets at AJ Bell, explained that "many airlines have navigated this year's oil price spike thanks to forward hedging, having locked in large swathes of fuel costs before the Iran war." Coatsworth warned that as those lower-cost hedges expire, airlines will face severe financial strain, adding that "travellers should brace themselves for a sharp increase in the cost of flying unless oil prices fall substantially."
Despite market headwinds, Ryanair expects to transport 214 million passengers during the current fiscal year, representing a 3 percent increase compared to 2025/26. However, O'Leary refrained from offering full-year profit guidance, explaining that financial forecasts remain "highly sensitive to… conflict escalation in the Middle East and Ukraine," fluctuating fuel prices, broader macroeconomic shocks, and strikes by European air traffic controllers.
