Wage freeze for Ryanair management as fuel price soars

Mar 26 2008

Soaring fuel costs hit Ryanair boss Michael O’Leary in the pocket today after he slapped a pay freeze on senior managers at the low-cost airline.

Mr O’Leary, who earned 992,000 euros (£781,000) in the year to last March, said none of Ryanair’s top 36 managers - including himself - would get a pay rise unless oil falls from its current high of around 100 US dollars a barrel.

The Ryanair boss hopes to save up to 10 million euros (£7.9m) through the move as part of a wider crackdown on costs as profits come under threat from the elevated prices. The airline’s wider staff will not be subjected to the pay freeze.

“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,” Mr O’Leary said.

He added that pay rises would also depend on managers seeing “some prospect of profits being increased”.

Ryanair’s fuel costs are currently hedged at 68 dollars a barrel but this expires at the end of March, leaving the company exposed to the higher oil prices.

The carrier has refused to add fuel surcharges to tickets and is reviewing all major costs including airport charges and staffing levels. A spokesman refused to comment on possible job cuts among Ryanair’s 4,000 staff.

Mr O’Leary said in February that the airline sector faced a “perfect storm” of soaring oil prices, poor consumer demand, a weaker pound and higher airport costs.

The company’s results for the three months to December 31 showed a 27% fall in profits to 35 million euros (£26.4m) compared with the same period in 2006.

Other airlines are also suffering with rising fuel bills. Last week Ryanair’s low-budget rival easyJet braced investors for lower profits after warning of a potential £45 million hike in fuel costs from the beginning of April.

Earlier this month, British Airways also said its annual fuel bill would soar by a fifth to £2.5 billion in the 2008/09 financial year.