Ryanair Announces Adaptation Plan Amid High Oil Prices

Ryanair's objective: to reduce costs. Nothing has yet been officially committed, but the Irish company plans to temporarily freeze the salaries of its employees, slow down recruitment and make increased use of everything managed by artificial intelligence. AI to simplify and optimize human work, or even replace it, in support functions such as administrative services.

In this era of expensive oil, there are no small savings. Also read "We are preparing for the future": faced with the rise in the price of kerosene, French manufacturers are joining forces to produce a fuel based on agricultural residues. This is all the more important for this company whose commercial strategy is based on low prices. Ryanair is the leading European airline in terms of number of passengers transported.

And everything related to ticket price is particularly sensitive to keeping customers and gaining new ones. The increase in the fuel bill will amount to billions. Today, Ryanair is covered up to 80% of its fuel needs, at a price of around 67 dollars per barrel, while crude is currently around 105-110. The company still lives on its reserves purchased before the conflicts at attractive prices.

For 2027 and 2028, it’s another matter. For these two years, only 25% of its fuel needs are covered at a higher price ($95 per barrel). Conclusion: based on the current price of a barrel of crude oil which is transformed into kerosene to make planes fly, Ryanair anticipates an increase of around two billion euros in its fuel bill.

You don't need to be an economist to understand the scale of the problem. All airlines are affected. So far, airline groups have been able to cope with soaring oil prices because they signed purchase and delivery contracts before the outbreak of war.

This blessed period is over. The new contracts that airlines sign are at a high price and will therefore require reductions in operating costs to avoid losing profitability. To date, the adjustment variables are employment and artificial intelligence which can take over in certain administrative functions.

Ryanair is the first airline to say this so clearly.

Machine-translated from French