Ryanair boss says risk of jet fuel shortage in Europe receding
Ryanair CEO Comments on Jet Fuel Supply and Market Impact
By Gwladys Fouche
Jet Fuel Supply Risk Assessment
OSLO, April 28 (Reuters) - Ryanair group CEO Michael O'Leary said the risk of a jet fuel supply shortage in Europe due to the Middle East conflict is receding and that fuel companies have told the airline they see no risk of potential disruption until the end of June.
But he predicted that rival European airlines would suffer as Ryanair uses its strong fuel hedging position to push down fares.
Recent Developments in Supply Confidence
O'Leary warned at the start of April that jet fuel supply to Europe could be disrupted from early June if the conflict does not end this month. However, fuel companies have become much more confident in the last week or two, he said on Tuesday.
"We think the risk of a supply disruption is receding," O'Leary told Reuters in an interview, citing a conference call with all of its suppliers across Europe on Monday.
He was dismissive of a warning from Sweden on Tuesday of a potential shortage of jet fuel.
No Supply Disruption Before the End of June
NO SUPPLY DISRUPTION BEFORE THE END OF JUNE
"A month ago we were saying we're all fine until the end of May. The fuel companies are now saying they're seeing no supply disruption risk until the end of June," O'Leary said.
He had singled out Britain as the market most exposed to potential shortages due to the amount of oil it imports from Kuwait. He said that risk had also receded and that some of the bigger oil companies Ryanair deals with have said they would step in in the unlikely event Kuwait runs short.
Market Demand and Fare Strategy
Trends in Booking Demand
While demand for last-minute bookings in April and May has been stronger than expected, O'Leary said demand was "a little bit weaker" for flights between June and September, prompting the airline to lower some fares to stimulate demand.
Downward Pressure on Fares
DOWNWARD PRESSURE ON FARES
He added that Ryanair would also keep downward pressure on pricing to put pressure on rival airlines whose fuel costs are not hedged out as far as Ryanair.
Average fares could therefore be flat in the financial year to end March 2027 rather than growing the 4-5% previously forecast, he said.
"If I was guessing today, and I'm completely guessing, I would have said our original planning prediction for fares up 4, 5%, I think we'd be moving towards kind of fares flat on last year at this stage," he said.
"We would still be very profitable if fares were flat this year," he added.
Potential Fare Increases if Conflict Ends
If the Middle East war finishes quickly, fares could rise by "maybe more than 3 or 4%", he added.
(Reporting by Gwladys Fouche in Oslo, writing by Padraic Halpin; editing by Sarah Young and Keith Weir)
