Ryanair's chief executive Michael O'Leary has warned that some European airlines could go out of business if jet fuel prices remain high throughout the summer. Prices have surged since the war in Iran began on 28 February after the Strait of Hormuz was blockaded by Tehran, leading to the worst fuel crisis in decades.
The price of Brent crude oil for June delivery fell 0.5 per cent to $110.71 per barrel early on Wednesday, but remains considerably higher than before the war, when it was around $70 per barrel. Jet fuel prices have risen nearly 84 per cent since the start of the conflict.
United Airlines and Lufthansa this week became the latest carriers forced to consider raising fares and scrapping flights. Speaking to CNBC, Mr O'Leary said: 'If pricing stays higher for longer this summer, we think a number of our airline competitors in Europe are going to face real financial difficulties.' He added: 'I think there will be failures. If it continues at $150 a barrel into July, August, September, then you'll see European airlines fail.'
Willie Walsh, head of the International Air Transport Association, told Reuters on Tuesday that airlines could face shortages if the war does not end soon. 'There is a risk that we'll see rationing of fuel supply, particularly in Asia and Europe,' he said, though he noted the situation is not yet as bad as the disruption caused by the Covid pandemic in 2020.
Mr O'Leary called for the Strait of Hormuz to be reopened as soon as possible but said Ryanair will not increase prices even if supplies are affected. 'We are the best insulated, most hedged airline in Europe. We can guarantee people there'll be no price increases, no fuel hedging, no fuel surge levy surcharges, regardless of what happens to summer supply,' he said.
