Most airlines will find the coming year “very difficult”, according to the boss of Ryanair, after the price of oil shot above $100 a barrel following Russia’s invasion of Ukraine.
Chief executive Michael O’Leary told Sky News that Ryanair was well prepared for higher oil prices, but said, “I think it’s going to be very difficult for most airlines for the next 12 months,” especially following two years of reduced travel due to COVID-19.
On Wednesday, the price of the international oil benchmark Brent crude rose to over $111 per barrel – its highest level since 2014 – as sanctions on Russia continued to be ramped up.
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“We have hedged out about 80% of our fuel needs out to March 2023. So for this summer, and for the rest of this year, we’ll still be able to pass on low oil prices and low fares to our customers because we have a very strong fuel hedging position,” Mr O’Leary added.
Ryanair suspended all of its flights to and from Ukraine following Moscow’s decision to invade its neighbour, but Mr O’Leary noted that flights to and from Poland had increased as Ukrainians travelled back to the UK to reunite with their families.
In December, Ryanair revealed a “sudden downturn” in Christmas bookings that had prompted it to slash January flights and pencil in annual losses more than twice as large as previously expected.
The Dublin-based airline disclosed the figures as it outlined the financial impact of the Omicron variant and attendant government restrictions designed to tackle its spread.
It said at the time it expected to report an annual loss of €250-450m (£212-383m) for the year to the end of March, up from €100-200m (£85-170m) previously given as guidance.
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Airlines were hoping to see a return to pre-coronavirus levels of travel this summer, as countries in Europe drop many of their COVID-19 regulations.
Mr O’Leary said Ryanair would be operating more flights from Poland, Romania, Italy and Germany, and to holiday destinations such as Greece, Italy, Spain and Portugal this summer.
But jitters about war in Europe are likely to damage sentiment, with demand for transatlantic flights already dropping, according to data.
Scott Keyes, founder of Scott’s Cheap Flights, said that Kayak flight-search data showed international travel searches dropped 8 percentage points overnight as the war in Ukraine began, the steepest fall in months.
If demand stays that low, “expect to see cheaper fares to Europe, capacity cuts to the number of transatlantic flights, or both,” he said.