Ryanair Sees Higher FY2027 Costs on Fuel, Labor Pressures

Ryanair said rising fuel, labor, and maintenance costs will push unit costs in fiscal year 2027, reflecting broader cost pressures across the aviation sector. The airline expects unit costs to increase by a mid-single-digit percentage, driven in part by fuel price volatility linked to geopolitical tensions. Around 20% of its fuel remains unhedged and has become more expensive, while 80% is secured at US$67 per barrel, providing partial protection to earnings.

Neil Sorahan, Chief Financial Officer, Ryanair Holdings, said the airline’s fuel bill has risen by “a few hundred million euros,” underscoring the scale of cost increases without providing a precise figure. The company said it is “too early” to issue detailed profit guidance due to uncertainty over fuel prices, supply conditions, and the duration of the Middle East conflict. 

Other European carriers are reporting similar pressures. International Airlines Group, owner of British Airways, and Lufthansa Group reported fuel cost increases of about €2 billion (US$2.16 billion) and €1.7 billion (US$1.84 billion), respectively. The increases are linked to supply concerns around the Strait of Hormuz, a critical route for global oil shipments. Ryanair said Europe remains well supplied through imports from the United States, Norway, and West Africa, limiting immediate operational disruption.

In addition to fuel costs, Ryanair expects European Union environmental taxes to rise by €300 million (US$324 million) this year. The airline also confirmed “significant pay increases for crew,” adding further pressure on operating costs. Maintenance expenses are increasing as older aircraft require more servicing, including engine overhauls for CFM LEAP engines. These combined factors are expected to lift overall cost exposure across its network.

Despite these pressures, Ryanair reported full-year profit after tax of €2.26 billion (US$2.44 billion), above its target range of €2.13–€2.23 billion. Revenue rose 11% year over year to €15.5 billion (US$16.7 billion), supported by strong passenger demand and network expansion. The company’s hedging strategy has helped stabilize margins compared with competitors more exposed to spot fuel prices.

Supply Conditions Remain Stable Despite Geopolitical Risk

European airlines and airport operators report stable jet fuel supply conditions ahead of the peak summer season, despite disruptions affecting shipments through the Strait of Hormuz. Industry participants say contingency sourcing and higher inventories are preventing operational interruptions. Airlines are also managing communications to limit demand volatility linked to fuel availability concerns during a key revenue period. 

According to the International Air Transport Association Fuel Monitor, global average jet fuel prices declined 10.1% week over week in early May to US$162.89 per barrel, indicating short-term easing after recent volatility. However, underlying supply dependencies remain significant, as about one-fifth of global oil shipments transit through the Strait of Hormuz, while Gulf producers supply roughly one-quarter of Europe’s jet fuel consumption.

Carsten Spohr, CEO, Lufthansa Group, said supplies are secured through mid-July, noting that “supplies and deliveries will be sufficient,” while adding that visibility beyond that period remains limited. He said part of the airline’s Gulf-sourced fuel has been replaced with alternative suppliers, with the remainder covered by reserves.

Michael O’Leary, CEO, Ryanair Holdings, said “the risk of a supply disruption is receding,” while József Váradi, CEO, Wizz Air Holdings, said higher prices are encouraging supply responses, adding, “I do not think we are going to be running out.” Inventory levels have increased, with i6 Group reporting a more than 60% rise in European airport fuel reserves in April.

Gary McLean, Managing Director, Dublin Airport, said operational impacts remain limited. “In the short term, we are certainly not seeing any impact on supply,” he said, adding that there are no concerns for the summer period.

Rising Prices Drive Operational Adjustments

European airlines continue to face rising operational costs and network disruptions as the conflict involving Iran drives higher jet fuel prices and constrains key transit routes. Since Feb. 28, prices have risen nearly 84%, placing sustained pressure on margins ahead of the summer travel season. Carriers are adjusting pricing, capacity, and procurement strategies in response to continued volatility.

Operational impacts are already visible in network adjustments. UK airlines cancelled 296 flights by May 12, more than double the 120 cancellations recorded on May 6, according to Cirium. Disruptions were concentrated on short-haul and marginal routes, where higher fuel costs reduce profitability.