Ryanair’s CEO predicts up to a 20% rise in fares next year as fuel costs soar, citing a $2.2 billion jump in the 2027 fuel bill and a new cost‑review plan.
On Monday, Ryanair chief executive Michael O’Leary told CNBC that the airline’s first‑half profit fell 15% to 2.15 billion euros ($2.3 billion) as the price of its 20% unhedged jet fuel doubled. O’Leary warned that the 2027 fuel bill could jump by about $2.2 billion, pushing European airfares up to 20% next year.
"I think you're going to see airfares rise next year across Europe by 10%, maybe even 20%," O’Leary said to CNBC’s Steve Sedgwick.
Ryanair has hedged 80% of its 2026 fuel at $67 per barrel, but the remaining 20% is exposed to the current market rate of roughly $170 per barrel. The company is launching a cost review that could cut crew rations, freeze pay temporarily, and deploy AI to improve efficiency.
Why It Matters
For investors, the announcement signals a potential squeeze on margins as fuel costs rise. Ryanair’s shares dipped 22% this year, and the airline has already trimmed its 2028 traffic target from 216 million to 214 million passengers to limit unhedged exposure.
Profit fell 15% to €2.15 billion in H1.
Fuel hedges cover 80% at $67/barrel; 20% unhedged at $170/barrel.
Projected 2027 fuel cost increase: $2.2 billion.
Potential fare hike: up to 20% across Europe.
Cost‑cutting measures include crew ration cuts and AI deployment.
For consumers, a 20% fare increase could mean higher ticket prices for the next two years, especially on short‑haul routes where Ryanair dominates. The airline’s flat winter capacity strategy—keeping 2027 winter traffic roughly the same as 2026—suggests it will not add seats to absorb the cost spike.
What Investors Should Watch
Key indicators include:
Fuel hedging strategy: Ryanair’s move to hedge 25% of 2028 fuel at $95 per barrel may mitigate future volatility.
Cost‑review outcomes: Any permanent cuts to crew rations or wages could affect employee morale and service quality.
Share price reaction: The stock’s performance in the coming weeks will reflect market confidence in the airline’s ability to manage higher costs.
Competitive response: Other low‑cost carriers may follow suit, potentially leading to an industry‑wide fare increase.
Regulatory environment: European aviation regulators may scrutinize fare hikes, especially if they appear to be a direct pass‑through of fuel costs.
What Passengers Can Expect
While Ryanair has not yet set new fares, the CEO’s comments suggest that ticket prices could rise by 10–20% next year. The airline’s flat winter capacity plan means that passengers may not see more seats available to offset the higher cost. Travelers should monitor fare changes closely, especially for budget‑conscious itineraries.
Next Steps for Ryanair
Ryanair plans to implement its cost review, potentially reducing crew rations and freezing wages temporarily. The airline also aims to increase its use of AI to drive operational efficiencies. These measures, combined with a tighter hedging strategy, will determine whether the company can maintain profitability while passing on higher fuel costs to customers.
As the 2027 fuel bill approaches, investors and consumers alike will watch how Ryanair balances cost control with price stability. The airline’s ability to navigate this challenge could set a precedent for the broader low‑cost carrier sector.
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