Ryanair’s boss just said something travelers and investors should pay attention to.
At the airline’s annual general meeting in Dublin, chief executive Michael O’Leary warned that airfares could rise sharply next year if oil prices stay high.
For a company whose main selling point is cheaper seats, that change is worth monitoring.
The timing matters too. The comments land at a time when Ryanair’s U.S.-listed shares (RYAAY) are trading close to their lowest level in a year.
What O’Leary told shareholders about Ryanair airfares
O’Leary said fares should be modestly lower in the July-to-September quarter, but the December and March quarters remain unpredictable.
The problem is fuel.
“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 said, according to CNBC.
Ryanair has guaranteed no extra fuel charges. Even so, O’Leary said fares may still rise if competitors raise prices first, Reuters reported.
How Ryanair makes money and why fuel costs matter so much
Ryanair is Europe’s largest low-cost airline. It sells cheap base fares and earns extra from seat choices and priority boarding.
That business model runs on high passenger volume and low operating costs.
Fuel is one of its biggest expenses, so an increase in oil prices affects its profit.
Brent crude has now gone above $100 a barrel due to the U.S. and Iran conflict, and jet fuel has climbed to about $140 a barrel, according to Aviation Week.
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Why Ryanair is better protected than most rivals this winter
Ryanair went into this oil crisis with a strong hedge, which locks in fuel prices in advance.
O’Leary said the airline is “better hedged than almost any other airline in Europe.”
Ryanair has secured 80% of its fuel needs up until the end of March 2027 at about $67 a barrel.
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The company has also locked in an additional 15% at $85 a barrel for the 2028 fiscal year, RTE reported.
That is well below today’s spot price. So Ryanair’s costs stay mostly predictable into next spring.
What the winter flight cuts and first-quarter profit drop reveal
Ryanair’s unhedged fuel has more than doubled in price, so it reduced winter flying to limit the damage.
The airline cut its full-year passenger target to 214 million from 216 million.
It expects the move to reduce winter losses by €70 million to €100 million, the Irish Times reported.
The strain of the profit squeeze was already showing. First-quarter profit after tax fell 34% to €538 million, even as traffic rose 6%, according to Aviation Week.
In Q1, average fares dropped about 6%.
Why Ryanair thinks weaker airlines could struggle to survive
O’Leary said less-hedged rivals could struggle to keep capacity, or even survive the winter, if high fuel prices continue, AeroTime reported.
If some weaker carriers pull back or fail, Ryanair could pick up their passengers and rebuild pricing power once fuel calms down.
Budget-focused travelers also tend to switch to cheaper airlines when money is tight.
What Ryanair investors should watch from here
RYAAY trades near $53, down about 26% year to date and close to its 52-week low of $53.14.
That’s well under its 52-week high of $74.24.
Still, Wall Street stays positive.
Key points for RYAAY investors
- Analysts rate RYAAY a Strong Buy, with an average price target at $68.45.
- Ryanair is hedged on 80% of fuel through March 2027 at about $67 a barrel.
- Winter capacity cuts aim to save €70 million to €100 million.
- Fares for the July to September quarter are set to be modestly lower year over year.
For now, winter pricing is unclear. But Ryanair’s fuel hedge and strong balance sheet leave it better placed than most peers.
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