Ryanair CEO Michael O’Leary told CNBC Monday that European airfares are set to rise “significantly,” growing by as much as 20% next year as fuel hedges expire.

The budget air carrier’s profit fell 15% to 2.15 billion euros ($2.3 billion) in the first fiscal half of the year, as the price of its 20% unhedged jet fuel doubled.

“So we’re facing 2027 where we have much higher oil prices… I think they’re going to get passed on in significantly higher airfares,” O’Leary told CNBC’s Steve Sedgwick on Monday.

“There’s still no resolution in the Middle East. Jet oil today is $170 a barrel. I mean, this is a very significant cost cliff we’re all facing next year. I believe you’re going to see airfares rise next year across Europe by 10%, maybe even 20%,” O’Leary added.

RyanAir said it doesn’t expect an increase in short haul airfares to fully offset an estimated 2-billion-euro increase in fuel charges. It is therefore launching a cost review, which will include lowering crew rations, a potential temporary pay freeze and the use of AI to drive further efficiencies.

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