Passengers wait to board a plane operated by Irish low-cost airline Ryanair at Berlin Brandenburg Airport in Schönefeld, near Berlin, Germany, on March 13, 2024.
John McDougall | AFP | Getty Images
Ryanair’s chief executive warned on Thursday that airfares could rise “significantly” if oil prices continue to rise, as soaring jet fuel prices continue to weigh on the airline industry.
“We expect prices to fall very slowly in the second quarter (July-September), but fully up in the December and March quarters,” Michael O’Leary told reporters ahead of the company’s annual general meeting, according to comments reported by Reuters.
“If oil prices remain high next year, I think airfares will rise significantly, which we hope to avoid,” O’Leary added.
CNBC has reached out to Ryanair for comment on this statement.
Oil prices edged higher on Thursday as Brent crude remained above $100 per barrel on concerns about escalating tensions in the Middle East and the impact on energy supplies. US West Texas Intermediate crude oil futures rose 1.4% to $97.4 per barrel.
Rising oil prices are causing the cost of jet fuel, an important energy source for airlines, to soar. The final price for the week ending Sept. 4 was $171 per barrel, up 90% from the year-ago average, according to the International Air Travel Association’s Jet Fuel Price Monitor.
O’Leary told CNBC in April that he expected some “failures” at weaker European airlines later this year as jet fuel costs become harder to absorb.
The company said at the time that it had hedged 80% of its jet fuel for the summer. It is hedged for 2027 at $67 per barrel, but only 15% of its needs are hedged for 2028 at $85 per barrel.
The low-cost carrier’s first-quarter profit took a 34% hit due to delays in consumer bookings after the start of the US-Iran Fe war. 28.
O’Leary said at the time that ticket prices were lowered in the first quarter because consumers were worried about booking amid the Middle East conflict.
“I can assure the public that no matter what happens to supplies over the summer, there will be no price increases, no fuel hedging, no fuel surcharges,” he added in April.
