Ryanair Boss Says Rival Airlines Could Collapse This Summer

TLDR

• Ryanair CEO Michael O’Leary says jet fuel supply risk in Europe is receding, now extended to end of June
• Jet A-1 fuel has surged from $80 a barrel in March to $150 following the Strait of Hormuz blockade
• O’Leary warns European airlines could fail if prices stay elevated through summer
• Ryanair has hedged 80% of its fuel and says it will not raise prices or add fuel surcharges
• Supply concerns in the UK have also eased over the past few weeks

Ryanair CEO Michael O’Leary says the risk of a jet fuel shortage in Europe is easing. A month ago, suppliers were confident through end of May. Now they say there is no disruption risk until at least end of June.

O’Leary made the comments following a conference call with all of Ryanair’s fuel suppliers across Europe on Monday. He shared the update in an interview with Reuters on Tuesday.

The supply concerns stem from the blockade of the Strait of Hormuz, a critical shipping route, after a war broke out in the Middle East on February 28. The blockade caused jet fuel prices to spike sharply.

Jet A-1 fuel was priced at around $80 a barrel in March. It has since climbed to $150, according to O’Leary, who spoke at the Norges Bank Investment Management Conference in Oslo.

O’Leary told CNBC’s Ben Boulos that if prices stay at this level through the summer, some European airlines will not survive.

Ryanair’s Fuel Hedge Offers a Buffer

Ryanair has hedged 80% of its fuel, which O’Leary says makes it the best-protected airline in Europe right now.

Because of that hedge, the airline is promising passengers there will be no price increases, no fuel surcharges, and no extra levies this summer, regardless of what happens to supply.

UK Supply Concerns Have Eased

O’Leary also addressed earlier worries about fuel supply in the United Kingdom specifically. He said conditions have improved over the past two to three weeks.

The overall tone from suppliers is more reassuring than it was a month ago. The window of confirmed supply stability has moved from end of May to end of June.

Ryanair currently serves over 230 airports across Europe and carries around 200 million passengers a year. It is one of the continent’s largest low-cost carriers.

The airline’s next scheduled traffic and financial update is expected in the coming weeks, where fuel costs will likely be a focus.

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