Ryanair boss Michael O’Leary warns European airlines could go bust if jet fuel prices remain high
Ryanair’s chief executive has warned that some European airlines could close if rising jet fuel prices remain high throughout the summer.
Prices have risen dramatically since the start of the war in Iran on February 28, following Tehran’s blockade of the Strait of Hormuz, which before the war carried a fifth of the world’s oil and gas, leading to the worst fuel crisis in decades.
The price of a barrel of Brent crude for delivery in June fell 0.5 percent to $110.71 early Wednesday, but remains much more expensive than before the war began, at about $70 a barrel. This increase means the price of jet fuel has increased by almost 84 percent since the beginning of the conflict.
United Airlines and Lufthansa this week became the latest airlines to be forced to raise fares and cancel flights as a result of the increase.
Michael O’Leary, Ryanair’s chief executive since 1998, believes summer rivals could face many challenges if prices remain the same.
Speaking to CNBC, Michael O’Leary said: “If prices stay high longer this summer, we think some of our airline competitors in Europe will face real financial difficulties.”
“I think there will be failures,” he added. “If it continues at $150 a barrel in July, August and September, you will see European airlines fail and that will probably be good for Ryanair’s business in the medium term.”
Earlier this month, Mr O’Leary warned that fuel supplies could be disrupted by the war amid fears of fuel shortages during the busy holiday season.
Airlines could face shortages if the war doesn’t end soon, International Air Transport Association president Willie Walsh told Reuters on Tuesday.
“There is a risk that we will see fuel supply rationing, particularly in Asia and Europe,” Mr Walsh said.
However, he added that the situation was not yet as bad as the disruption caused by the Covid epidemic in 2020, which caused travel demand to collapse and the aviation industry to suffer hundreds of billions of dollars in losses.
To avoid such a situation, Mr O’Leary called for the Strait of Hormuz to reopen as soon as possible but said the airline would not increase prices even if supplies were affected.
He said: “We are the best insulated, most protected airline in Europe.”
“Whatever happens to summer supply, we can assure people that there will be no price increases, no fuel hedging, no increase in fuel duty,” he said.
