Ryanair Says Some of Its Rivals Will Not See Next Summer

Michael O’Leary used Ryanair’s annual general meeting on 10 September to deliver the bluntest fare warning European travellers have had this year. If oil prices stay where they are into next year, he said, short-haul airfares across Europe will see a significant uplift, rising materially to reflect the cost of fuel. Oil has pushed above $100 a barrel as the US-Israeli conflict with Iran has escalated, and jet fuel has followed it up. For a decade the reliable story in European aviation has been fares grinding downward; O’Leary’s message was that the direction is about to reverse.

The reason Ryanair can talk about next summer rather than next month is hedging. The airline routinely locks in seventy to ninety per cent of its fuel in advance, and its July disclosure showed eighty per cent hedged at $67 a barrel through next March. That is a very large gap between what Ryanair pays and what the spot market costs, and it buys the carrier most of a year of insulation while competitors absorb the increase in real time. It also explains why Ryanair can be relaxed about a cost shock that is genuinely dangerous to other people.

O’Leary was explicit about what he expects that to do to the competition. Less well-hedged carriers, he said, will struggle to hold their capacity through the coming winter and some may not survive it at all — he has previously forecast real failures if fuel stays elevated. Winter is when European short-haul airlines make losses at the best of times, funded by summer profits. A fuel bill that arrives unhedged on top of a structurally loss-making season is the specific combination that has killed smaller European airlines before.

For passengers the practical reading is about timing rather than panic. Fares booked now for winter travel are largely insulated, because that capacity is already sold and the schedules are already published. The exposure is summer 2027, where airlines are only beginning to load seats and will price them against whatever fuel costs by then. If a route matters and the dates are firm, booking early is a cheaper hedge than waiting — and travellers on smaller carriers may also want to think about what happens to their money if an airline does not make it through winter.

Sources: CNBC, RTÉ