Ryanair: Hedging Strategy Remains a Key Competitive Advantage AmidSurging Oil Prices; Ancillary Revenue in Focus

After interviewing a number of executives in the aerospace space, Louis Knight, AVP at Third Bridge, made a series of remarks regarding Ryanair, informed by insights from industry experts:

While the airline is successfully outperforming peers on passenger volume, external pressures such as soaring fuel costs and aircraft delivery delays remain the primary focus.

In the short term, with oil prices surging due to ongoing instability in the Middle East, Ryanair’s hedging strategy has become a major competitive advantage, with the airline being roughly 80% hedged for the current year. Our experts point to Michael O’Leary’s ability to use these “locked-in” lower costs to reduce ticket prices and undercut rivals such as Wizz Air and SAS, which are less protected and may be forced to raise fares.

Earlier this year, Ryanair reported a significant earnings miss. This has led to more cautious investor sentiment about how much ancillary revenue (priority boarding, baggage fees, etc.) can continue to offset kerosene costs. All eyes are now on the certification of the Boeing 737 MAX 10. While current growth is being driven by the MAX 8, the larger MAX 10 is slated to enter the fleet in 2027 and is critical to Ryanair’s long-term goal of carrying 300 million passengers by 2034.

In the longer term, the airline is focusing on insourcing engine maintenance, a major cost component for any airline. In February 2026, Ryanair signed a multibillion-dollar 15-year services agreement with CFM. Under the deal, the airline will purchase more than USD 1 billion per year in spare parts from CFM. Ryanair also plans to open two MRO facilities to maintain around 2,000 CFM engines. Our experts estimate the deal will likely shift engine maintenance from a fly-by-the-hour model to a time-and-materials model, potentially cutting maintenance costs per engine by 10–30%. Bringing MRO operations in-house would eliminate the labour markup charged by CFM and provide discounts on parts. Owning the facilities would also allow Ryanair to “skip the queue", reducing downtime and potentially shortening engine turnaround times. The only meaningful risk to this MRO expansion is sourcing and training qualified engine technicians, but with three years of lead time, Ryanair should have sufficient time to mitigate this challenge. Additionally, Ryanair could eventually offer third-party engine MRO services to other airlines, similar to the model used by Lufthansa Technik.