Ryanair Cuts Traffic Target, Cautions on Winter as Fuel Costs Soar
Ryanair Adjusts Strategy Amid Rising Fuel Costs
By Yamini Kalia
Traffic Target Reduction and Fuel Hedging
Sept 2 (Reuters) - Europe's biggest budget airline Ryanair cut its fiscal 2027 traffic target on Wednesday to reduce losses and its exposure to costly unhedged fuel this winter, warning that high oil prices could be a survival test for some less-hedged rivals.
A jet fuel crisis triggered by the Iran war is reshaping the global aviation sector, forcing major European carriers to either hold capacity flat or cut it ahead of the typically loss-making winter season.
Impact of High Oil Prices
"If high oil prices continue through to S.27 (summer 2027), Ryanair believes short-haul airfares in Europe will increase materially to reflect higher oil prices, as some less well-hedged competitors will struggle to maintain capacity or even survive this coming winter season," Ryanair said.
Ryanair's Fuel Hedging Position
One of Europe's best-hedged airlines, Ryanair said 80% of its jet fuel needs were hedged through March 2027 at about $67 a barrel.
Capacity Management and Financial Impact
Passenger Target and Analyst Commentary
The airline cut its fiscal 2027 traffic target to 214 million passengers from 216 million. Davy analyst Stephen Furlong said the cut was "proactive management" by Ryanair, and he expects other airlines to follow suit.
Winter Capacity Strategy
Aircraft and Seat Reductions
AIRLINE WILL KEEP WINTER CAPACITY BROADLY FLAT
Ryanair had already removed five aircraft from its Charleroi base in Belgium in July, and cut 2 million seats from its Brussels schedule for winter 2026 and summer 2027.
Limiting Exposure to Fuel Costs
The Dublin-based carrier, which said jet fuel was currently around $140 a barrel, will keep winter capacity broadly flat year-on-year to limit exposure to unhedged fuel costs, a move it said could reduce its winter losses by €70 million to €100 million ($81 million to $116 million).
Market Reaction and Outlook
Share Performance and Traffic Growth
Ryanair shares, which have lost about 20% of their value since the Iran war, rose 2%. The airline said its April to October traffic was on track to grow by over 5%, with second-quarter fares trending modestly down year-on-year, soothing investors' nerves.
Profit Guidance and Passenger Numbers
While Ryanair said profit would be below last year's record level, it added that it was too early to provide meaningful guidance for profit after tax.
The airline carried 22.2 million passengers in August.
Additional Information
($1 = 0.8646 euros)
(Reporting by Yamini Kalia and Yadarisa Shabong in Bengaluru. Editing by Sherry Jacob-Phillips, Mark Potter and Jan Harvey)
