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27/03/2008
Ryanair Freezes Top Staff Pay As Fuel Costs Soar
Much higher jet fuel costs have had an unexpected result with Ireland's main 'budget' airline imposing a pay freeze on management - although so far, there's no sign of job cuts.
Ryanair will have to make cost savings of around €400m to compensate for the expected defecit and is holding management pay as a first step.
Michael O'Leary, the airline's Chief Executive, told a press conference in Brussels at the end of March that Ryanair's current 'fuel hedge' deal expires on April 1 and with the oil price hovering around the 100 usd/barrel mark, O'Leary said the airline was freezing the pay of over 30 of its senior management team for 2008.
"Given the enormous increase in our fuel costs, and the likelihood that profits over the coming year may fall, it is appropriate that Ryanair's senior management lead this cost reduction programme by example, with a pay freeze in 2008," he said in a statement released after the event.
O'Leary said Ryanair's 2008 fuel bill would rise by about €400m and confirmed the airline needs to cut costs by the same amount.
He added that significant cost cuts were also needed in many areas, and did not rule out withdrawing Ryanair flights from certain airports - something that could well have an impact on the numbers employed.
He said that airports which were not able to reduce costs could find themselves losing Ryanair flights, while those who did make significant reductions could well be rewarded with more flights.
"We are working intensively on other cost reductions, including focusing on airport costs and handling costs, staff costs and other operating expenses, as we expand Ryanair while lowering fares but absorbing much higher oil costs," O'Leary said.
The airline warned that Ryanair would continue to increase the cost of checking in luggage in order to encourage passengers to fly with only hand luggage where possible.
However, O'Leary added that Ryanair's fares should not be affected and that the carrier still hoped to double the volume of business over the next five years.
In February Ryanair said it was 'essentially unhedged' on fuel for next year, adding that high oil prices would impose significantly higher costs for the 2008/09 full year.
Earlier this month, Ryanair's low-cost rival easyJet said its fuel bill in the second half could rise by £45m if the price of jet fuel remains at current unprecedented levels.
(BMcC)
Ryanair will have to make cost savings of around €400m to compensate for the expected defecit and is holding management pay as a first step.
Michael O'Leary, the airline's Chief Executive, told a press conference in Brussels at the end of March that Ryanair's current 'fuel hedge' deal expires on April 1 and with the oil price hovering around the 100 usd/barrel mark, O'Leary said the airline was freezing the pay of over 30 of its senior management team for 2008.
"Given the enormous increase in our fuel costs, and the likelihood that profits over the coming year may fall, it is appropriate that Ryanair's senior management lead this cost reduction programme by example, with a pay freeze in 2008," he said in a statement released after the event.
O'Leary said Ryanair's 2008 fuel bill would rise by about €400m and confirmed the airline needs to cut costs by the same amount.
He added that significant cost cuts were also needed in many areas, and did not rule out withdrawing Ryanair flights from certain airports - something that could well have an impact on the numbers employed.
He said that airports which were not able to reduce costs could find themselves losing Ryanair flights, while those who did make significant reductions could well be rewarded with more flights.
"We are working intensively on other cost reductions, including focusing on airport costs and handling costs, staff costs and other operating expenses, as we expand Ryanair while lowering fares but absorbing much higher oil costs," O'Leary said.
The airline warned that Ryanair would continue to increase the cost of checking in luggage in order to encourage passengers to fly with only hand luggage where possible.
However, O'Leary added that Ryanair's fares should not be affected and that the carrier still hoped to double the volume of business over the next five years.
In February Ryanair said it was 'essentially unhedged' on fuel for next year, adding that high oil prices would impose significantly higher costs for the 2008/09 full year.
Earlier this month, Ryanair's low-cost rival easyJet said its fuel bill in the second half could rise by £45m if the price of jet fuel remains at current unprecedented levels.
(BMcC)
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