Key takeaways: The CEO of Ryanair said in an interview that as jet fuel prices surge, European airline ticket prices will rise "substantially" in 2027.
Michael O'Leary said in the interview: "The entire industry will face a severe cost cliff next year."
Because the price of unhedged jet fuel has doubled, the airline's profit in the first half of its fiscal year fell by 15%.
Ryanair CEO Michael O'Leary said on Monday that as fuel hedging contracts gradually expire, European ticket prices will rise significantly next year, by as much as 20%.
The European low-cost carrier's profit in the first half of its fiscal year fell 15% to 2.15 billion euros (about $2.3 billion).
Twenty percent of the company's jet fuel is unhedged, and the price of that portion has directly doubled, dragging down earnings.
O'Leary said on the program: "In 2027 we will face much higher oil prices... I think the cost pressure will be passed on, and ticket prices will rise significantly."
"Over the past 12 months, consumers have not yet felt the oil price shock, but the previous hedging contracts are now expiring one after another. The situation in the Middle East remains unresolved. The current jet fuel price has reached $170 per barrel. Next year the entire industry will face enormous cost pressure. I expect ticket prices across Europe to rise by 10%, and possibly even 20%."
Ryanair said that higher fares on short-haul routes will not be enough to fully cover the additional 2 billion euros in fuel costs expected next year. To that end, the company has launched a cost review, with measures including reducing crew allocations, considering a temporary pay freeze, and using artificial intelligence to further improve operational efficiency.
Ryanair's shares listed in Ireland edged higher in early trading on Monday, then gave up their gains and turned slightly lower. The stock has fallen more than 22% year to date.
The airline already cut its full-year passenger target in September, from 216 million to 214 million, in order to reduce purchases of unhedged fuel during the winter period. It now expects winter passenger volumes from November to March to be roughly flat year on year.
O'Leary said: "This winter you will see European airlines, including Ryanair, cutting winter capacity for the first time in many years. This winter's capacity is flat compared with last year. If you have to buy unhedged fuel at the high price of $170 per barrel, continuing to expand capacity makes no sense."
This year, Ryanair hedged 80% of its jet fuel at a locked-in price of $67 per barrel. The company said this gives it an advantage over competitors and protects its earnings from sharp oil price swings.
In addition, Ryanair has already hedged at least 25% of its fuel for 2028 at a locked-in price of $95 per barrel.
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