Ryanair has warned that some rival airlines may be forced out of business by the end of 2026 as soaring fuel costs strain the aviation industry. The caution came as Europe's largest budget carrier reported a 34% drop in after-tax profit to €538 million (£457 million) for the three months ending June, driven by a doubling of jet fuel prices amid the Iran war.
Smaller Carriers on the Edge
Chief Financial Officer Neil Sorahan told Reuters that smaller carriers are already struggling and predicted a tough period ahead. 'A few airlines are on the edge and are going to have a very difficult winter,' he said. 'I wouldn't be surprised if some fail.' Sorahan added that the shake-up would lead to route and flight reductions as airlines buckle under pressure. 'You're going to see significant capacity come out of the market this winter,' he stated.
Impact of Jet Fuel Price Surge
Jet fuel prices have doubled to around $150 (£111) per barrel during the quarter due to the Iran war, which began in February after joint US-Israeli strikes on key Iranian sites. Iran retaliated by targeting locations across the Middle East and closing the Strait of Hormuz, a waterway through which one-fifth of global oil passes. A short-term peace deal last month briefly eased energy markets, but oil prices rose again after fighting resumed weeks ago.
Uncertainty Ahead
Ryanair CEO Michael O'Leary stated it is too early to predict the year's outcome, noting the airline's results remain 'highly sensitive to adverse external developments,' including escalating conflicts in the Middle East and Ukraine, unhedged jet-fuel prices, and European air traffic control strikes. The warning underscores the fragility of the aviation sector as geopolitical tensions continue to disrupt fuel supplies and operational stability.
