Budget airline Ryanair has warned that European airfares are likely to “increase materially” in the next year, as the Middle East crisis continues to push up the cost of jet fuel.
The Ireland-based carrier said it expected jet fuel prices to “remain elevated well into 2027”, unless there was a “swift resolution” to the US-Iran war, as the company published its half-year earnings report on Monday (2 November).
Like other European airlines, Ryanair is facing a massive increase in its fuel bill as pre-war price hedges come to an end. The airline is forecasting that its annual fuel bill will rise by around €2 billion in the 2027-28 financial year.
Ryanair CEO Michael O’Leary told CNBC that higher fuel bills could lead to European airfares rising by up to 20 per cent next year.
In its financial statement, O’Leary said Ryanair was “reviewing all costs” across its airlines, which could lead to “temporary pay freezes” for staff, lower onboard crew numbers and an increased use of AI to improve operational and back-office productivity.
This review comes after Ryanair announced a 15 per cent year-on-year drop in post-tax profit to €2.15 billion for the six-month period from 1 April to 30 September, compared with a profit of €2.55 billion in 2025.
The group blamed this fall in earnings on the doubling in price of its unhedged fuel bill and a 4 per cent reduction in the average fare to €55.70 — down from €58 for the same period of 2025.
Ryanair’s traffic went up by 6 per cent year-on-year to 125.8 million passengers during the half-year, which boosted group revenue by 3 per cent year-on-year to €10.1 billion, including 6 per cent growth in ancillary revenue to €3.1 billion.
O’Leary attributed the fall in airfares this summer to “consumer hesitancy and later bookings” caused by the Middle East crisis. Although he added that demand for the current quarter between October and December was “strong”, with fares “trending modestly ahead” of the same period in 2025.
Despite this positive outlook, Ryanair has already announced plans to cut two million seats from its winter schedule, as well as trimming its passenger traffic forecast from 216 million to 214 million for the current financial year up to 31 March 2027.
Ryanair is due to receive its first 16 Boeing 737 MAX 10 aircraft in spring 2027, which will allow it to target annual traffic of more than 220 million passengers in the 2027-28 financial year.
O’Leary said growth in 2027 would be focused on countries that were cutting aviation taxes and airport fees, including Italy, Slovakia, Sweden, Albania and Morocco.
He added that Ryanair would be “switching flights and traffic away” from markets such as Austria, Germany and some regions of Spain due to rising taxes and costs.
In October, Ryanair announced it would reduce German capacity by 10 per cent (700,000 seats) this winter and close its Berlin base because of “excessive” costs at Berlin and Hamburg airports.