Budget Airline Warns Jet Fuel Shock Could Wipe Out Rivals

Ryanair, the budget airline, has cautioned that a potential surge in jet fuel prices could lead to the downfall of some of its European rivals next summer. The Dublin-based company has implemented emergency measures to safeguard itself against the rising fuel costs triggered by the Iran conflict. Ryanair has reduced its passenger targets from 216 million to 214 million for the current year and secured fixed-price contracts for 80% of its fuel requirements for the upcoming year.

To offset the higher fuel costs, Ryanair has decreased its flight schedule, which is expected to reduce its losses for the winter period by €70 million to €100 million. The carrier is projected to grow its summer traffic by over 5% to 145 million passengers this year. However, Ryanair warns that some of its European competitors may face significant challenges due to the soaring jet fuel prices caused by the closure of the Strait of Hormuz, particularly if high oil prices persist through next summer.

The airline anticipates a substantial increase in short-haul airfares in Europe if high oil prices continue. In July, Ryanair disclosed that the cost of its unfixed-price fuel needs had more than doubled at the beginning of the year, reaching $150 per barrel, leading to a 11% increase in its operating costs to €3.8 billion and a 36% drop in pre-tax profit to €593 million.