European airlines could face closure by September if jet fuel prices remain at elevated levels, according to Wizz Air CEO József Váradi. He warned that the downturn in bookings later in summer already strains airlines, and the additional burden of the fuel crisis could prove disastrous.
Váradi's Warning
Speaking to The Telegraph, Váradi stated: 'At the moment, all airlines are selling against summer demand, which is the highest-priced capacity during the year. But you run out of steam by the end of June.' He added: 'Airlines go bust two times a year, in September and February. Airlines with weak liquidity positions will come under immense pressure in September time. No one is really taking capacity out during the summer because you are still making money. Winter is totally different. My personal expectation is that you will see a flood of capacity removed from the market in September and October time.'
Impact on Major Carriers
Váradi argued that struggling airlines could be at greater risk, suggesting that British Airways and Air France might also face difficulties. Some airlines have already made cuts due to the crisis. German airline Lufthansa axed 20,000 summer flights in Europe, citing rising fuel prices making many journeys 'unprofitable'. The cancellations, which affect hubs in Frankfurt, Munich, Zurich, Vienna, Brussels, and Rome, aim to save 40,000 tons of jet fuel. Lufthansa noted that jet fuel costs have 'doubled since the outbreak of the Iran conflict'.
Industry Response
Trade body Airlines UK urged ministers to prepare to avoid disruption, warning of the 'immediate impact on the UK aviation sector and UK consumers in the event disruption to jet fuel supply continues or worsens'. The body called for building fuel reserves by increasing kerosene production at oil refineries, importing US-grade fuel usable by some aircraft, and cutting taxes while suspending some environmental regulations. British families may face summer travel chaos as volatile oil prices drive up airfares and cause cancellations.
Fuel Supply Disruptions
Jet fuel supplies from the Middle East have been disrupted since the US-Israeli war with Iran began, due to Iran's effective closure of the Strait of Hormuz shipping route. Váradi said fuel costs could remain high for up to 18 months, regardless of whether the strait reopens. This follows Ryanair CEO Michael O'Leary's claim that both Wizz Air and airBaltic could exhaust cash reserves by winter's end due to the fuel crisis, leading to potential collapse. O'Leary stated that fuel costs for his airline increased by £50 million this month, warning of shortages as early as May. He noted that Wizz Air and airBaltic are at high risk because they haven't locked in lower fuel prices, cautioning that if oil prices don't drop, both carriers could run out of cash by year-end, potentially collapsing by October or November.
Váradi's Rebuttal
However, Váradi rebuked these claims, stating that Wizz Air has no liquidity issues and holds €2 billion (£1.7 billion) in cash.
