Ryanair says it might freeze pay, cut other costs to offset high fuel prices

Ryanair Considers Pay Freeze and Cost Cuts to Offset Soaring Fuel Prices

Ryanair's Response to Rising Fuel Costs

Cost Review and Potential Pay Freeze

DUBLIN, Nov 2 (Reuters) - Ryanair is reviewing all its costs due to higher fuel prices and may require staff to take temporary pay freezes, the low-cost airline said on Monday after reporting a 6% decline in net profit for the July-to-September quarter, in line with expectations.

Airfare Outlook and Fuel Bill Impact

The Irish airline, Europe's largest in terms of passenger numbers, said that while it expects short-haul airfares to rise materially next year, that is unlikely to fully offset an estimated €2 billion ($2.24 billion) increase in its fuel bill for the financial year that ends in March 2028, based on current forward prices.

Market Conditions and Future Projections

"Unless there is a swift resolution of the Middle East conflict, we expect jet fuel prices to remain elevated well into 2027," Chief Executive Michael O'Leary said in a statement, adding that negotiations with airports, lower crewing ratios and increased use of AI in back-office operations could also yield cost savings.

Fare Trends and Hedging Strategy

Average fares fell by 2% year-on-year in the company's second quarter that ended in September and are trending modestly ahead of the same period a year earlier in the current quarter, it said.

Fuel Hedging Details

One of Europe's best-hedged airlines, Ryanair said its fuel needs through March 2027 remained 80% hedged at $67 a barrel, while it nudged up its hedges for the following 12 months to 25% at $95 a barrel compared with 15% at an average of $85 at the end of June.

Profit Report and Analyst Expectations

Ryanair reported an after-tax profit of €1.61 billion for the quarter, when it typically makes most of its profit, due to it capturing most of the northern hemisphere's busy summer holiday season. That was in line with a company poll of analysts.

(Reporting by Padraic Halpin; Editing by Thomas Derpinghaus)