Ryanair ‘confident’ it will avoid jet fuel shortage but warns of future fare rises

Ryanair is “confident” it will not face a jet fuel shortage this summer amid fears over widespread cancellations linked to the Iran war, but warned that holidaymakers booking their flights later this year could face higher fares.Neil Sorahan, the chief financial officer at the budget airline, said he was “increasingly confident that we will not see any supply shocks this summer”.The airline said fares had fallen in recent weeks due to uncertainty around conflict in the Middle East, with prices expected to fall by a “mid-single digit percentage” in the three months ended in June.The company also cut its outlook for fares this summer, with prices now expected to be “broadly flat” on last summer, after a previous forecast of a modest increase in the peak travel season.“Demand is still strong, but people are leaving it longer to book so we do not have the visibility that we normally have for July to September,” Sorahan said.“Closer-in bookings are strong but if people leave it late they could take on higher fares,” he added.The travel industry has been hit by worries around jet fuel supply this summer, as shipping through the Strait of Hormuz remains restricted. Ryanair said Europe is well stocked with fuel thanks to shipments from West Africa, Norway and the Americas.Holidaymakers have been leaving it later than in previous years to book their summer trips, and showing increased interest in domestic trips.Dan Coatsworth, the head of markets at AJ Bell, said the market was “too fragile” to raise fares in response to rising costs, as higher inflation continued to squeeze consumer spending.He said: “Airlines and holiday companies are having to drop prices, or at best keep them level, just to keep demand ticking over. If cost pressures remain intense, they will have no choice but to put prices up. Fortunately, Ryanair has a strong enough balance sheet to weather any storms.”The airline reported a record profit after tax of €2.26bn (£2bn) in its financial year ended in March.However, it suspended guidance for its 2027 financial year, saying it was “far too early” to provide forecasts owing to potential increases in fuel, environmental taxes and wage bills.While Ryanair has hedged 80% of its jet fuel requirements to April 2027 at about $67 a barrel, unit costs on fuel could still rise if prices remained higher, it said.The company also flagged that it expected its environmental taxes in the EU to increase by €300m this year to about €1.4bn, “which makes EU air travel even less competitive”.Shares in Ryanair, which are listed in Dublin, dropped by about 4% in early trading on Monday morning. The stock has lost more than a quarter of its value since the start of the year.The company, which is the biggest airline in Europe by passenger numbers, added it is in negotiations with the chief executive, Michael O’Leary, about extending his contract beyond 2028 to 2032.Under the proposed new contract, the Ryanair boss would be able to buy 10m shares at the market price before the Iran war, but only if “very ambitious profit after tax or share price growth targets are achieved”.O’Leary has been chief executive of the business since 1994. Sorahan said details of his new contract would be confirmed over the next few weeks.