Ryanair Holdings (cdi) (LON:0RYA) reported a 15% decline in first-half profit to €2.15 billion, as higher unhedged jet-fuel costs outweighed traffic growth and a decline in summer fares.
Group Chief Executive Michael O’Leary said traffic increased 6% during the first half, while fares fell 4% during the peak summer period. He attributed the fare decline partly to the timing of Easter in April and to consumer hesitancy and later booking patterns stemming from the Middle East conflict. The carrier lowered prices to stimulate demand and volumes, he said.
Operating costs rose 10% to €7.7 billion, driven principally by the doubling in the price of the company’s 20% unhedged fuel exposure compared with its hedge price of $67 per barrel, as well as supplier compensation costs following delivery of its final Boeing 737 “Gamechanger” aircraft last year.
Fuel hedging and capacity plans
Ryanair said 80% of its FY27 jet-fuel requirements remain hedged at $67 per barrel, which O’Leary said had insulated its earnings and customers from the recent rise in oil prices. The airline has also increased its FY28 fuel hedge coverage to 25% from 15%, at an average price of $95 per barrel, after taking advantage of lower market prices.
However, management said the cost of fuel next year is expected to rise materially as lower-cost hedges expire. O’Leary estimated that Ryanair faces a €2 billion increase in its fuel bill next year and said it would need roughly a 20% increase in fares, or about €10 per passenger, to fully offset that rise. He added that the company did not expect to recover the entire increase through fares alone and would pursue further cost reductions.
The company reduced its FY27 traffic target to 214 million passengers from 216 million, citing a desire to lower exposure to unhedged fuel costs during the winter. Winter traffic from November through March is now expected to be broadly flat year over year.
For FY28, Ryanair expects traffic to rise to about 220 million passengers, supported by the planned arrival of 16 Boeing MAX 10 aircraft in spring 2027. O’Leary said the aircraft, which are expected to carry 20% more seats while using 20% less fuel, would support approximately 3% traffic growth. Ryanair is awaiting European certification of the MAX 10 before taking delivery of the aircraft.
Fares improve entering third quarter
Despite lower first-half fares, management said pricing has improved since early August. O’Leary said third-quarter demand through December was strong and fares were trending modestly ahead of the same period a year earlier. Chief Commercial Officer Jason McGuinness said Ryanair was about 50% sold for the December quarter but only 8% sold for the March quarter, leaving limited visibility into the final quarter.
The company linked improving pricing to capacity reductions across the European short-haul market. McGuinness said the market had seen an estimated 8 million to 9 million seats removed over the prior six to seven weeks. Management expects constrained capacity and higher fuel expenses among competitors to support higher European airfares next summer.
Ryanair also said it is reallocating aircraft toward markets where governments and airports have lowered aviation taxes or fees. The company highlighted Albania, Italy, Morocco, Slovakia and Sweden as growth markets, while reducing exposure to countries including Austria, Belgium, Germany and parts of Spain where charges remain high or are increasing. The summer 2027 schedule includes 126 new routes and a new base in Rimini, Italy.
Cost actions and financial position
Management said it would review costs throughout the group to mitigate the projected fuel-cost increase. Potential measures include airport negotiations, capacity reallocations, lower pilot recruitment and training, greater use of artificial intelligence in support functions, and temporary pay freezes for labor agreements that are not completed before the end of March 2027.
Group CFO Neil Sorahan said ex-fuel costs are expected to be somewhat higher in the second half because costs will be spread over 214 million rather than 216 million passengers, alongside labor-agreement costs and maintenance timing. He said ex-fuel unit-cost benefits should emerge from airport agreements, the MAX 10 fleet and future engine-shop operations.
Ryanair ended the half year with €2.6 billion in gross cash after repaying €1.3 billion of debt, investing €800 million in capital expenditure and making €400 million in shareholder distributions. Sorahan described the company as effectively debt-free, with 620 unencumbered Boeing 737 aircraft and a BBB+ credit rating.
The board declared an interim dividend of €0.273 per share, payable in late February 2027, and approved a new €800 million share buyback scheduled to begin in February and run for about 10 months. The company completed a €750 million buyback in September and said it has retired more than 40% of its issued share capital since 2008.
Ryanair did not provide formal FY28 profit guidance, citing uncertainty around oil prices, fuel hedging and fare trends. O’Leary said market expectations for FY27 profit were about €1.7 billion to €1.8 billion and that there was a “reasonable chance” the company could maintain that level in FY28, depending on fuel and pricing outcomes.
About Ryanair Holdings (cdi) (LON:0RYA)
Ryanair Holdings plc is a major European airline group known for operating low-fare passenger air services. Through its airline operations, the company provides scheduled flights across a broad network of domestic and international routes, serving leisure and business travelers throughout Europe and beyond.
The company is best known for its low-cost model, which centers on short-haul air travel and high aircraft utilization. In addition to passenger transport, Ryanair also offers ancillary services such as reserved seating, priority boarding, checked baggage, and onboard sales, which form an important part of its overall business.
Ryanair Holdings was founded in 1984 and grew from a small Irish airline into one of Europe’s largest carriers.
