Ryanair Considers Pay Freeze and Warns of Higher Fares

Irish low-cost airline Ryanair is considering a temporary freeze on employee pay and warns that air fares in Europe will rise significantly next summer. According to the BBC, the reason is a sharp increase in aviation fuel prices caused by the war waged by the United States and Israel against Iran. The company expects fuel prices to stay high well into 2027 unless the conflict is resolved quickly.

Rising costs

Ryanair has estimated that its fuel costs could increase by two billion euros in the short term. Chief executive Michael O'Leary has said that covering the extra expense would require fares in Europe to rise by a double-digit percentage. He previously suggested increases of as much as 20%, but admitted he was not sure that would be achievable. In 2027, he said, passengers of all European airlines could face double-digit price increases.

About 80% of the fuel Ryanair needs has been bought in advance at fixed prices, while the remainder must be purchased at current, considerably higher prices. In the six months to the end of September, the airline's profit before tax fell by 16% to 2.4 billion euros. One of the main reasons was a 15% rise in fuel costs.

The war with Iran has significantly reduced supplies of refined oil products from the Persian Gulf region and intensified competition for fuel from other suppliers, pushing prices up.

Pay freeze and other savings

A pay freeze could begin in April next year, when several current multi-year pay agreements with trade unions expire. The company describes it as a temporary measure to ease the impact of rising costs. The union Unite, which represents Ryanair staff, has been asked to comment on the plan.

The airline also intends to use artificial intelligence more widely in administrative and support work in order to cut operating costs.