Ryanair knows what it pays for fuel this year. It locked in 80% of it at $65 a barrel. That was a very good deal. Oil closed Monday, Nov. 2 at $96.46. But the deal has an end date. For the year ending March 2028, Ryanair has hedged just 25% of its fuel, at $95. The airline told investors Monday its fuel bill rises about €2 billion, or $2.23 billion, as a result.
A fuel hedge is a fixed-price plan. The airline agrees today to pay a set price for fuel it will burn later. If oil goes up, it keeps paying the old price. If oil goes down, it pays more than its neighbors. Ryanair's $65 hedge looks very cheap next to Monday's oil price. The Journal's Adrià Calatayud reports the hedge kept earnings for the year ending this March well insulated. The unhedged part is the problem. Last quarter the cost of unhedged jet fuel doubled.
The year the deal runs out
The numbers for the quarter ended Sept. 30 show the squeeze. Pretax profit was €1.83 billion, down from €1.96 billion a year earlier. Net profit fell 6% to €1.61 billion. Operating expenses rose 10%. Revenue rose to €5.7 billion from €5.48 billion, a bit under the €5.72 billion analysts expected. The airline still plans an €800 million buyback starting in February. It raised its interim dividend to 27.3 euro cents a share from 19.3. Then comes next year. CEO Michael O'Leary said Monday that unless the Middle East conflict ends quickly, "we expect jet-fuel prices to remain elevated well into 2027." As cheap hedges roll off before summer 2027, he said, every EU airline faces a much higher fuel bill.
Ryanair's plan has three parts. Fares go up. European short-haul fares are expected to rise materially. Costs come down, through airport deals, labor agreements, lower crewing ratios and AI. And it grows anyway. It expects traffic to rise 3% to 220 million passengers in fiscal 2028, with its first 16 Boeing 737 MAX 10 jets due in the spring. The airline's U.S. shares (RYAAY) closed Monday at $55.29, up $1.57. Investors took the quarter in stride. The bill is next year's problem, and the company said so out loud.
Our read
This is a Cash Flow · M5 story. We don't hold Ryanair in any model book. Boeing (BA) is held at weight in 7 books, nothing added, and the MAX 10 deliveries are a small plus for it. The lesson is the hedge itself. Ryanair didn't predict oil. It bought a year of certainty at a set price. That certainty had a date on it. Management knew the date and has spent a year planning for what comes after. That's the whole skill.
You have hedges too. You just call them something else. A fixed-rate mortgage is a hedge against higher rates. A fixed-price electricity or gas plan is a hedge against the utility's rate. A CD is a hedge on your savings rate. Every one of them has a roll-off date, like Ryanair's summer 2027. This week, write down the end date of each fixed-price deal in your house. An adjustable mortgage reset, a utility plan term, a CD maturity. If one lands in 2027, start pricing what comes after it now. If it's a big one, like a mortgage reset, bring it to your next review. Ryanair is pricing its 2027 fuel today, with the cheap hedge still on. You can price your 2027 the same way, while the rain is still a forecast.