Ryanair CEO says winter fares may rise after slight upturn

Ryanair CEO Expects Winter Fares May Rise After Recent Upturn and Oil Price Surge

Ryanair Fare Outlook and Impact of Oil Prices

By Conor Humphries and Graham Fahy

DUBLIN, Sept 10 (Reuters) - Ryanair Chief Executive Michael O'Leary nudged his airline's outlook for average fares higher on Thursday, saying they may rise slightly this winter following a "mild upturn" since July, although the outlook depended heavily on oil prices. 

The airline's average fares fell month-on-month from February to July, contributing to a slump in profits in its last financial quarter, as high oil prices raised costs.

O'Leary said on Thursday, however, that fares had since risen by a "very low-single digit" amount year-on-year.

"In the last month, there's been a slight upturn," O'Leary told a news conference. It is impossible to say what was causing the increase or whether it would be sustained, he added. 

Recent Fare Trends and Predictions

Slight Upgrade from July Prediction

SLIGHT UPGRADE FROM JULY PREDICTION

Average fares for the current quarter from July to September as a whole are set to fall by a very low-single-digit percentage year-on-year, he said.  

That is a slight upgrade from his July prediction that falls were moving closer to mid-single digits than low-single digits. 

Winter Season Fare Expectations

For the winter season from October to March, O'Leary in July said fares were set to fall by low to mid-single digits in percentage terms, but that pricing might move to flat or even slightly higher if rivals reacted to oil costs by reducing capacity. 

On Thursday he said the flat-to-slightly higher scenario appeared more likely.   

"A lot depends on what happens to oil prices for the next five or six months but ... I would be reasonably hopeful that pricing will be flat-ish, maybe even slightly positive in the second half of the year," he said. 

Oil prices have this week risen above $100 a barrel as attacks increased in the U.S.-Israeli war on Iran.

Operational Adjustments and Fuel Hedging

Significant Uplift in Fares if Oil Remains High

SIGNIFICANT UPLIFT IN FARES IF OIL REMAINS HIGH

Ryanair cut flights from its winter schedule earlier this month to reduce losses and its exposure to unhedged fuel, resulting in a reduction of its fiscal 2027 traffic target to 214 million passengers from 216 million.

If oil prices remain high into next year, there will be a "significant uplift" in airfares, O'Leary said. 

Fuel Hedging Strategy

The airline stopped hedging its jet fuel needs in recent weeks as oil prices rose again but O'Leary said he thinks there will be plenty of time to extend those hedges between now and Christmas.

One of Europe's best-hedged airlines, Ryanair has hedged 80% of its fuel needs through March 2027 at about $67 a barrel and 15% for the following year at $85 per barrel.

(Reporting by Conor Humphries and Graham Fahy, writing by Padraic Halpin, editing by Sam Tabahriti and Barbara Lewis)