Ryanair reported a 15% decline in net profit to €2.15 billion for the six months ending September 30, driven by rising jet fuel bills and falling average fares, and is now reviewing all group costs including potential staff pay freezes.
Profits Fall on Soaring Fuel Costs and Lower Fares
Europe’s largest airline by passenger numbers posted an after-tax profit of €2.15 billion for the first half of its fiscal year, down from €2.54 billion during the same period last year, according to rte.ie. Operating costs climbed 10% to €7.69 billion. The Irish Times reported that the increase was largely fueled by a doubling in the cost of unhedged jet fuel and the end of supplier compensation tied to Boeing deliveries. At the same time, average fares dropped 4% to €55.70, forced down by consumer hesitancy following the Middle East conflict, the Irish Examiner reported.
Despite the profit dip, revenues for the six-month period rose 3% to €10.08 billion, up from €9.82 billion. Passenger numbers increased by 6% to reach 125.8 million, compared with 119 million a year earlier, rte.ie noted.
Group Cost Reviews and Potential Staff Pay Freezes
To counteract surging fuel expenses, Ryanair is reviewing all operations across the group. Group Chief Executive Michael O’Leary stated that the company may require staff to take temporary pay freezes. The Irish Times noted that these labor deals are due to be renegotiated with unions in the coming months. Additional cost-saving measures include lower crewing ratios, airport negotiations, and an increased deployment of artificial intelligence in back-office and support operations, rte.ie reported.
The airline faces an estimated €2 billion increase in its fuel bill for the financial year ending March 2028, based on current forward prices. While management expects short-haul airfares to rise materially next year, O’Leary warned that higher ticket prices are unlikely to fully offset the soaring fuel costs. “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 in a statement carried by rte.ie.
Fuel Hedging Strategies and Winter Capacity Reductions
Ryanair remains one of Europe’s best-hedged airlines. Its fuel needs up to March 2027 are 80% hedged at $67 a barrel. For the subsequent 12 months, the airline nudged up its hedges to 25% at $95 a barrel, compared to 15% at an average of $85 at the end of June, according to rte.ie. The Irish Times noted that hedges for the next financial year were secured at $99 a barrel.
To limit exposure to unhedged fuel costs during the winter, Ryanair has already reduced its planned flight schedule. Consequently, the carrier lowered its full-year passenger traffic target from 216 million to 214 million. Chief Financial Officer Neil Sorahan told rte.ie that he expects demand to remain strong next year, stating that “an extra €5 or €10 on a Ryanair airfare won’t necessarily dampen people’s willingness to travel.”
Frequently Asked Questions About Ryanair’s Financial Review
How much did Ryanair’s passenger numbers grow in the first half of the year?
Ryanair carried 125.8 million passengers during the six months to the end of September, representing a 6% increase from the 119 million passengers flown during the same period last year, rte.ie reported.
What percentage of Ryanair’s fuel is hedged for the upcoming periods?
According to rte.ie, Ryanair’s fuel needs up to March 2027 remain 80% hedged at $67 a barrel. The airline also increased its hedges for the following 12-month period to 25% at $95 a barrel.
Why did average fares decline during the first half of the fiscal year?
Average fares fell 4% year-on-year to €55.70. The Irish Examiner reported that the Middle East conflict created consumer hesitancy and later booking windows, prompting airlines to drop prices to secure passengers.
“Unless there is a swift resolution of the Middle East conflict, we expect jet-fuel prices to remain elevated well into 2027,” Michael O’Leary said.