Ryanair has issued a cautionary outlook regarding airfare trends in Europe, stating that sustained high oil prices pose risks to the airline industry’s profitability and sustainability. The Irish budget carrier reduced its annual passenger forecast to 214 million from an initially planned 216 million, citing the need to limit exposure to volatile jet fuel costs during the typically unprofitable winter months.
With jet fuel currently trading at $140 per barrel, Ryanair anticipates that passenger numbers between November and March will remain relatively unchanged from the preceding year. The airline projects that cost-cutting measures, including reducing its winter schedule, could trim winter losses by between €70 million and €100 million. Despite these headwinds, Ryanair expects to remain profitable for the year, having hedged 80% of its jet fuel costs at $67 per barrel, though earnings are expected to fall short of the previous year’s record.
Ryanair’s management stated that if elevated oil prices persist through the following summer, short-haul airfares across Europe will likely increase materially, with less-protected competitors potentially facing capacity reductions or closure. The warning comes as global oil benchmarks fluctuate amid geopolitical tensions, with Brent crude reaching $97.04 per barrel earlier in the week before settling near $95.
Looking ahead, Ryanair plans to expand summer capacity between April and October by more than 5%, targeting 145 million passengers compared to 138 million in the prior period. Current fares for the late summer months are showing modest declines compared with the previous year. Meanwhile, competitor Wizz Air reported a 25.9% increase in passenger numbers for the month, driven by expanded flight capacity.
Article Attribution | Read More at Article Source
Article summary produced by Claude AI