Ryanair chief executive Michael O’Leary warned that surging oil prices could push “two or three” European carriers into bankruptcy as early as October or November. He cited a rapid run-up in jet fuel costs tied to instability in the Middle East and risks around the Strait of Hormuz.
“If oil remains at these levels, two or three European airlines could go bankrupt in October or November, like Wizz Air, which wants to sue me, but won't have enough time to do so, and Air Baltic. A good thing for our business, as there will be fewer competitors,” he said in an interview with Italian newspaper Il Sole 24 Ore. Ryanair has already spent an additional $50 million on fuel in April alone.
Europe’s kerosene supply has been drastically curtailed by the Iran conflict, with current reserves estimated to last only six weeks. O’Leary warned the full impact has yet to be felt. He said flight cancellations could begin from June if conditions persist. Jet fuel has climbed from $74 to $150 per barrel, intensifying cost pressures across low-cost carriers.
Ryanair said it is relatively shielded. It hedged 80% of its fuel needs at $67 per barrel through March next year. The remaining 20% was purchased on the market at levels exceeding $150 per barrel. The company said this leaves it better insulated than competitors in the months ahead, though it still faces higher outlays at current prices.
“Categorically untrue”
Wizz Air rejected O’Leary’s outlook. It said it has liquidity to last at least 18 months, supported by a solid financial structure, stable partnerships with lessors and manufacturers, and one of the most robust hedging positions in the industry. The company said its modern fleet lowers fuel burn and underpins a strong balance sheet. It called Ryanair’s bankruptcy suggestions “categorically untrue and false,” Euronews reported.
Latvia's AirBaltic, also mentioned by O’Leary, confirmed it has modified schedules in response to fuel costs, commercial demand, and operational efficiency. It said the number of affected passengers has been limited. Latvia’s parliament approved a €30 million loan to mitigate the negative impact of Middle East turmoil on the company’s finances. The loan must be repaid by August 31 of this year. The airline said it is assessing network adjustments ahead of the peak travel season.
Lufthansa canceled 20,000 flights
The turbulence extends beyond low-cost operators. Lufthansa canceled 20,000 flights for the summer, about 10% of its schedule. It reported fuel costs have surged by 40% since the start of the year. Executives across the industry warned that sustained price levels could force further schedule cuts or fare increases, even as passenger demand remains elevated in many markets.
Former European Commissioner for Energy Andris Piebalgs questioned whether airlines are using the difficult context to justify price hikes or service reductions.