Ryanair’s O’Leary warns European airlines could fail if jet fuel price doesn't fall
Ryanair CEO Michael O'Leary warned that European airlines could face failures this summer if high jet fuel prices persist, noting that prices have nearly doubled since March due to disruptions including the Middle East conflict. He said Ryanair is insulated, having hedged 80% of its fuel needs, and will not raise prices. Other carriers without such protection may struggle financially if prices remain at $150 a barrel. O'Leary suggested such failures could benefit Ryanair in the medium term.
- ▪Jet fuel prices rose from $80 to $150 a barrel since March due to supply disruptions linked to the Middle East conflict.
- ▪Michael O'Leary stated Ryanair has hedged 80% of its fuel, protecting it from current price surges.
- ▪He warned that sustained prices at $150 a barrel could lead to financial difficulties and failures among European airlines.
- ▪Ryanair will not impose fuel surcharges or raise prices this summer regardless of fuel costs.
- ▪Fuel supply concerns in the UK have eased somewhat over the past few weeks.
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European airlines will fail if the price of jet fuel remains elevated over the summer, the CEO of budget airline Ryanair warned.Speaking to CNBC on Thursday, CEO Michael O'Leary said that his airline was protected because it had hedged 80% of its fuel but predicted "real failures" for other airlines if the price of jet fuel did not fall.The price has surged since the critical Strait of Hormuz was blockaded after the war in the Middle East began on Feb. 28."Pricing has mushroomed since March. Jet A-1 was about $80 a barrel in March. It's now $150," O'Leary told CNBC's Ben Boulos at the Norges Bank Investment Management Conference in Oslo."If pricing stays higher for longer this summer, we think a number of our airline competitors in Europe are going to face real financial difficulties," he said."I think there will be failures," O'Leary added. "If it continues at $150 a barrel into July, August, September, then you'll see European airlines fail and that, in the medium term, would probably be good for Ryanair's business."He added: "We are the best insulated, most hedged airline in Europe.""We can guarantee people there'll be no price increases, no fuel hedging, no fuel surge levy surcharges, regardless of what happens to summer supply," O'Leary continued."We were very worried about supply in the UK about two or three weeks ago, but it does seem to have improved."
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