Ryanair profit falls 15% as unhedged fuel doubles and it weighs pay freezes for next year

Ryanair said its profit after tax for the six months to September fell 15% to €2.15 billion as its unhedged jet fuel doubled in price, and it warned that a larger fuel bill in its next financial year may require temporary pay freezes, according to its half-year results release on Monday, November 2.

Fuel doubled on the fifth of the bill that was not hedged

Profit after tax was €2.15 billion in the first half of its financial year 2027, against €2.54 billion a year earlier. Traffic grew 6% to 125.8 million passengers, but the average fare fell 4% to €55.70 from €58.00, and revenue rose 3% to €10.08 billion. Operating costs rose 10% to €7.69 billion.

Ryanair said the price of the 20% of its jet fuel that was not hedged doubled to about $130 a barrel. Its fuel for the year to March 2027 is 80% hedged at about $67 a barrel. Chief executive Michael O'Leary attributed the lower fares partly to the Middle East conflict, which he said led to consumer hesitancy and later bookings.

The harder year is the one starting in April

The company said that, unless the Middle East conflict is resolved quickly, it expects jet fuel prices to stay elevated well into 2027. Its cover for the following year is 25% at about $95 a barrel, and it estimates an increase of about €2 billion in that year's fuel bill at current forward prices. It said it expects European short-haul fares to rise materially, but that this is unlikely to offset the full amount.

To address the gap, Ryanair said it is reviewing costs across the group, including airport negotiations, maturing labor agreements, which may require temporary pay freezes, lower crewing ratios and more use of artificial intelligence in operations and back-office functions. Unite, the union representing Ryanair staff, told the BBC it had not been told of any such proposals and that a multi-year pay deal covering next year is in place.

Cash returns continue while traffic is trimmed

Ryanair declared an interim dividend of €0.273 a share and a new share buyback of €800 million starting in February. Gross cash was €2.6 billion on September 30, after €1.3 billion of debt repayments. For this winter it cut its full-year traffic target to 214 million passengers from 216 million, and for the coming summer it plans traffic of over 220 million passengers, helped by 16 new Boeing MAX-10 aircraft. The company said fares for its third quarter are trending modestly ahead of the same quarter last year, and that it has no visibility on the fourth quarter.

The pay freeze is a bet on hedges that are rolling off

We think the release shows how much of Ryanair's lead rests on the hedge book: this year's profit is cushioned by fuel bought at about $67 a barrel, while the next year starts with only 25% covered at a higher price. Paying shareholders €800 million while warning of a €2 billion fuel increase is consistent with a strong balance sheet, and it also leaves less room if fares disappoint.

The opportunity is that higher fuel costs and competitors' capacity reductions, which the company cites, could lift fares across the industry. The threat is a labor dispute: Unite says it has not been told of any such proposal and that a multi-year pay deal covers next year. We expect fares and fuel prices to decide next year's result more than cost cuts do, if the Middle East conflict persists, and we would change that view if oil prices fall back toward the hedged level.

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