Ryanair CFO warns weaker European carriers may not survive jet fuel crunch
ryanair The budget airline is preparing for an “apocalypse situation” amid the jet fuel crisis, its chief financial officer told CNBC on Monday.
“Do we have plans for some kind of Armageddon situation? Of course there are, but I don’t think it’s going to happen. As it stands, we’re running a full schedule this summer, and we plan to run a full schedule over the winter as well,” Neil Sorahan told CNBC’s Ritika Gupta in an interview.
“I think we’re going to see some of the weaker carriers that were already struggling before the war going to the wall in the winter,” Sorahan said after the airline announced full-year earnings.
The carrier hedged 80% of its summer fuel at $668 per metric ton, citing “economic uncertainty” caused by the conflict in the Middle East and the ongoing blockade of the Strait of Hormuz. Sorahan said the airline “does not plan to cancel.”
“We’re obviously in very volatile oil markets right now. Going back a few months ago we probably had some concerns about oil supply, but we’re increasingly confident that there won’t be problems with oil this summer,” Sorahan said.
He said he was “not overly concerned” about Ryanair’s jet fuel supply as Europe’s dependence on the Strait of Hormuz has decreased and suppliers now buy oil from countries such as the US, Venezuela and Brazil.
“That said, I think prices will remain high for longer, which puts Ryanair in a particularly strong position given our strong fuel hedge,” Sorahan said.
Ryanair reported a 40% increase in after-tax profits to nearly 2.3 billion euros ($2.7 billion) in the year ending March, while passenger traffic also rose 4% to 208.4 million. Meanwhile, its revenue fell 11% to 15.54 billion euros.
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