Ryanair: Brace for Higher Airfares! Oil Prices Threaten European Travel

European travelers could face a significant jump in airfares next year, with some airlines even at risk of going bust, according to a stark warning from budget carrier Ryanair. The airline attributes this potential crisis to persistently high oil prices.

Ryanair has already taken proactive steps to mitigate its exposure to what it calls "unhedged winter oil." It has cut its passenger target for the year ending March 31, 2024, from 216 million to 214 million. This reduction aims to lessen the financial impact during the typically less profitable off-season, especially with jet fuel currently trading around $140 a barrel.

The company anticipates passenger numbers between November and March to remain broadly flat compared to the previous year.

Brent crude, the global oil benchmark, recently touched $97.04 a barrel, its highest point since late July, fueled by renewed clashes between the US and Iran which stirred concerns over supply. While it has since eased slightly, the sustained high cost of fuel is a major concern for airlines.

Ryanair believes that if these high oil prices persist into summer 2027, short-haul airfares in Europe will "increase materially" as less well-hedged competitors struggle to maintain capacity or even survive the upcoming winter season.

Despite the challenging outlook for the industry, Ryanair expects to remain profitable.

The airline has prudently hedged 80% of its jet fuel at a much lower $67 a barrel.

This strategy is projected to reduce its winter losses by €70 million to €100 million.

While this year's profit might not surpass last year's record, Ryanair is on track for another profitable period, highlighting the competitive advantage of its hedging strategy in a volatile market.

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