Low-cost airline Ryanair, which runs extensive routes in and out of Portugal, has warned of the ‘possibility’ of jet fuel shortages in May if the war in the Middle East doesn’t end by mid-April.
Company CEO Michael O’Leary concedes that the conflict needs to have concluded before the start of May. If not, ticket prices also will start becoming more expensive.
Ryanair is “reasonably well hedged” as it has 80% of the fuel it anticipates requiring up until March 2027 already purchased (when oil was at the price of 67 dollars per barrel). But it is paying almost double (around 150 dollars a barrel) for the other 20%.
“Fuel suppliers are constantly looking at the market. We don’t expect any disruption until early May, but if the war continues, we do run the risk of supply disruptions in Europe in May and June, and we hope the war will finish sooner than that, and the risk to supply will be eliminated,” O’Leary told Sky News.
“We think there is a reasonable risk, some low level, maybe 10% to 25% of our supplies might be at risk through May and June, so like everyone else in this industry, we hope the war ends sooner rather than later.”
And by that he means, he hopes that the fighting stops and the Strait of Hormuz returns to ‘normal’, allowing oil and everything else carried by tankers (including vital fertilizers) through.
The trouble with these kind of comments is that while they are acknowledged by everyone, no one can tell if the Strait will ‘return to normal’, as this is something that Iran’s ‘apparent chief negotiator’ has stressed will not happen.
Right now, the understanding is that Iran wants to start charging tolls on the Strait – which would increase costs, even if it was safe for tankers to start sailing again.
The only good news for the time being is that unlike other low cost carriers (O’Leary cites Wizz and easyJet), Ryanair is not considering cancelling flights, or reducing capacity.
Source material: noticiasaominuto/ Sky News
