Ryanair is to seek savings of around €400m as the price of oil rises to over $100 a barrel. The company will also freeze the pay of 36 senior managers, including CEO Michael O'Leary.
At a news conference in Brussels, Mr O'Leary 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.
The airline is reviewing all its main costs - including airports, staffing levels and fuel - because of the soaring price in oil, but Mr O'Leary would not be drawn on where exactly the cuts would be made.
He warned, however, that airports which were not able to reduce costs may find themselves losing Ryanair flights, while those who did make significant cost reductions would be rewarded with more flights.
Mr O'Leary said Ryanair's profits would be badly affected by the surge in oil prices, and repeated a warning that next year's profits could fall by as much as 50%.
He stressed, however, that Ryanair's fares should not be affected and that he still hoped to double the volume of business over the next five years.
Mr O'Leary launched a scathing attack on the European Commission for its investigations into small airports across Europe where Ryanair has been launching operations.
The Commission has been checking if Ryanair has been enjoying favourable terms from governments and regional authorities which may qualify as illegal state aid at airports such as Charleroi in southern Belgium and Bratislava in Slovakia.
Mr O'Leary insisted these were discounts which were market driven and complained that numerous state airlines, like Air France and Alitalia, had for years been enjoying state aid and bail-outs.
