Ryanair Chief Signals Potential 20% Fare Surge in 2027 as Fuel Hedging Shield Crumbles

Ryanair CEO Michael O’Leary warned CNBC on Monday that European airfares are poised to climb “significantly” next year, potentially jumping by as much as 20% as protective fuel hedges unwind.

The low-cost carrier reported a 15% drop in first-half profit to €2.15 billion ($2.3 billion), hit by a doubling in the cost of the 20% of its jet fuel that remained unhedged.

“We’re facing 2027 where we have much higher oil prices… I think they’re going to get passed on in significantly higher airfares,” O’Leary told CNBC’s Steve Sedgwick.

“The market customers have been insulated for the last 12 months… but those hedges are rolling off. There’s still no resolution in the Middle East. Jet oil today is $170 a barrel. I mean, this is a very significant cost cliff we’re all facing next year. I believe you’re going to see airfares rise next year across Europe by 10%, maybe even 20%,” he added.

Ryanair cautioned that higher short-haul fares are unlikely to fully absorb an estimated €2 billion increase in fuel charges next year. Consequently, the airline is launching a cost review encompassing reduced crew allowances, a possible temporary pay freeze, and the deployment of AI to unlock further efficiencies.

Ryanair’s Dublin-listed shares initially ticked higher in early Monday trade before surrendering gains to slip into negative territory; the stock has declined over 22% year-to-date.

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Ryanair stock since the beginning of the year.

In September, the airline trimmed its full-year traffic target from 216 million to 214 million passengers to limit exposure to unhedged fuel during the winter season. It now projects winter traffic between November and March to remain broadly flat year-on-year.

“I think you’re seeing even this winter, all of the airlines across Europe, even Ryanair, for the first time in many years, we cut our winter capacity,” O’Leary said. “We’ll only be flat this winter over the prior year, because it makes no sense for us to be growing capacity if we’re buying unhedged oil at $170 a barrel.”

Ryanair had hedged 80% of its jet fuel at $67 per barrel for the current year, providing an earnings buffer against volatile oil prices that many competitors lacked. The carrier added it has already secured at least 25% of its 2028 fuel requirements at $95 per barrel.

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