Ryanair warns that high fuel costs will likely mean more expensive flights and frozen staff pay

Ryanair warns that soaring fuel costs will likely result in higher fares and stagnant staff salaries. The budget airline disclosed that its profits have declined by 15% year-on-year, reaching 2.15 billion euros ($2.4 billion) for the six months ending September 30. This drop is attributed to the rising expenses associated with jet fuel.

Ryanair has hedged more than 80% of its fuel costs, but the remaining fifth has doubled in price since the start of the Iran War, reaching around $130 per barrel. CEO Michael O'Leary revealed that the airline anticipates a 2 billion euro ($2.2 billion) increase in its fuel bill for the upcoming financial year. To address this issue, Ryanair is considering raising airfares by approximately 20%, or around 10 euros per passenger, to cover the additional costs.

However, O'Leary expressed uncertainty about reaching this target, suggesting that a lower increase may be necessary. In a bid to reduce the impact of unhedged fuel expenses, the airline is reviewing all costs, which could include temporary pay freezes for employees and increasing the use of artificial intelligence to improve efficiency in operations and support functions.

Additionally, Ryanair has lowered its traffic target from 216 million passengers to 214 million, indicating no year-over-year growth during the winter season. Despite this, the company aims to boost growth by 3% next year by adding 16 new Boeing 737 Max 10 aircraft to its fleet. These Max 10 planes can accommodate an additional 20 passengers compared to the Max 8.

The certification process for the Max 10, which has faced delays, is expected to be completed soon by both the Federal Aviation Administration and European regulators. Following the announcement, Ryanair shares experienced a slight increase in both European and pre-market trading on the Nasdaq.