Ryanair issues price rise warning to millions as jet fuel crisis hits airline
Ryanair prices could be about to increase, with the airline revealing by how much.
It's all due to the ongoing crisis in the Middle East, with the Strait of Hormuz blocked due to the continued conflict between the USA and Iran.
With around 20% of the world's global jet fuel being transported through the Strait of Hormuz, there has been continued global worry about supply chain disruption and price rises due to demand remaining and supply going down.
The current price of jet fuel sits at $162 per barrel, with the price before the Iran War being around $73 per barrel.
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Speaking to Bloomberg this week, Ryanair CEO Michael O'Leary says that while their jet fuel prices are mostly fixed until spring 2027, prices could still rise if the Hormuz impasse continues for much longer.
Ryanair prices and jet fuel
Right now, 80% of Ryanair fuel is 'hedged'. This means it has agreed to pay a fixed rate of $67 per barrel until April 2027.
But obviously that's not everything it is paying for, and the other 20% has to come from somewhere.
It also has to plan for life after April 2027 and what it may end up paying in the short to medium term.
Speaking to Bloomberg, O'Leary says that the company was in 'great shape... [with] no issues over jet fuel supply right now through to the end of September'.
That's summer sorted, but what about after? Issues with pricing could arise.
Ryanair 'concern' over oil prices
With no delays expected to Ryanair's summer schedule, O'Leary still says he is 'very concerned about the price of oil' to the point that he fears for the longevity of other airlines across the European continent.
As a result, he says prices could rise by five percent on Ryanair flights across the UK, Ireland, and mainland Europe.
"Our unit cost might rise, you know, mid-single digits this year," he said.
"There's one issue in the UK. Kuwait, which is the subsidiary of the State of Kuwait, who have about 30 per cent market share at some of the airports in the UK.
"Even they now are re-sourcing that supply. Most of Europe's jet A1 supply comes from West Africa, the Americas, Norway, and the lifting of Russian sanctions has also eased the supply of jet one into Eastern European countries.
"I'm very concerned about the price of oil, but I don't believe the conflict in Iran will have any disruption on European jet supplies. I do. The question for us is, how long will the Strait of Hormuz remain closed?
"If the Strait stay closed till September, October, November, then we are looking at our unit costs up about five per cent, but you'll be looking at kind of airlines failing all over Europe."
Topics: Ryanair, Travel, Money, UK News, World News
Tom Earnshaw