Ryanair CEO Says Fuel Crisis Might Lead to European Airlines Collapse
Speaking to media, O'Leary acknowledged that Ryanair enjoys a degree of insulation, having hedged 80% of its fuel requirements, but cautioned that competitors carrying weaker hedging positions could soon be staring down "real financial difficulties."
His warning was blunt and data-driven: "Jet A-1 was about $80 a barrel in March. It's now $150," he said, adding that should prices hold at that level into July, August, and September, "you'll see European airlines fail."
The figures underscore the severity of the squeeze. The average price of jet fuel climbed to $179 per barrel in the week ending April 24, according to the International Air Transport Association's Jet Fuel Price Monitor — a staggering escalation since the Strait of Hormuz was blockaded following the outbreak of war in the Middle East on Feb. 28.
Ryanair Holds Firm on Fares — For Now
O'Leary declared Ryanair "the best insulated, most-hedged airline in Europe," and ruled out passing higher fuel costs on to passengers through surcharges or fare hikes. He noted that fuel supply anxieties in the UK had eased somewhat in recent weeks, but emphasized that the Strait of Hormuz must reopen "as quickly as possible."
The International Energy Agency has recently cautioned that Europe could confront jet fuel shortages within weeks, contingent on its capacity to source alternative supplies to replace volumes previously drawn from the Middle East — a region that had accounted for a significant portion of the continent's net jet fuel imports.
Carriers Scramble to Limit the Damage
Across the sector, airlines are already deploying emergency measures to contain the financial fallout.
EasyJet disclosed it absorbed £25 million ($34 million) in additional fuel costs in March alone and now anticipates posting a headline loss of between £540 million and £560 million for the six-month period ending March 31. The carrier has hedged 70% of its summer fuel requirements but has signaled that capacity reductions and higher ticket prices are inevitable.
Lufthansa has gone further, axing 20,000 short-haul flights through October in a bid to conserve 40,000 metric tons of jet fuel and eliminate loss-making routes. Scandinavian carrier SAS is canceling 1,000 flights in April attributable directly to fuel costs, while Dutch operator KLM is trimming capacity by 80 flights in response to surging kerosene prices.
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