The numbers come first. Ryanair hedged 80% of its fuel needs at $67 per barrel through March 2027, according to its July corporate disclosure. The remaining 20% is fully exposed to market pricing — and jet fuel in Europe now averages $180 per barrel, according to the International Air Transport Association.
CEO Michael O'Leary made the stakes plain on Thursday. 'If oil prices remain high into next year, I think there will be a significant uplift in airfares, and we would hope to avoid that,' he told reporters in comments reported by Reuters. A Ryanair spokesperson declined to comment further.
The warning lands against a backdrop of escalating military conflict between the U.S. and Iran that has driven oil above $100 a barrel. When the war in Iran began, the Strait of Hormuz — through which a quarter of global seaborne oil supply passes — closed, and the price of jet fuel initially doubled. Europe was hit harder than the United States because the continent imported roughly half of its jet fuel from the Middle East.
Ryanair had positioned itself better than most. The carrier has historically locked in 70% to 90% of its jet-fuel costs in advance, and its annual report released in June stated that 'our industry leading hedging means we are better insulated from higher oil prices than any EU competitor.' That buffer bought time. It did not buy immunity.
The airline cut its winter flight schedule last week in direct response to its unhedged fuel exposure. CFO Neil Sorohan told CNBC in May that the company has plans for an 'armageddon situation' if the conflict escalated further, while declining to rule out price increases. 'We haven't promised no price increases,' Sorohan said. 'We price to fill the planes and the consumers pretty much decide what that pricing is going to be.'
Ryanair is not alone in absorbing the shock. Lufthansa cut 20,000 flights through October. United Airlines said it will cut 5% of its planned flights. Delta said it would 'meaningfully' cut its growth plans. United, American Airlines, Southwest, and JetBlue all raised checked bag fees. United and American each estimated roughly $6 billion in additional fuel costs compared to last year.
The pressure proved fatal for at least one carrier. Spirit Airlines, which had presented a reorganization plan before the war started projecting domestic fuel prices at $2.20 per gallon, shuttered in May after an effort to rescue it through a federal bailout failed. The IATA now puts that domestic figure at $4.12 per gallon.
The market has already voted. O'Leary built Ryanair's model on a no-frills formula inspired by Southwest Airlines — cheap seats, nothing included — and held that line through the Great Financial Crisis and Covid. The current energy environment is a different order of magnitude. When hedges roll off in March 2027, the cost structure that made $20 transatlantic hops possible faces its most serious test in the airline's history. Free enterprise rewards discipline and preparation; Ryanair prepared better than its rivals. But no hedge lasts forever, and consumers across Europe are about to find out what unhedged jet fuel at $180 a barrel actually costs at the checkout.
