Ryanair Has ‘Armageddon’ Plans For Jet Fuel Crisis, Says CFO

Following the closure of the key shipping channel, the Strait of Hormuz, jet fuel prices have reportedly doubled.

Since then, some airlines have floated the idea of, or issued, price hikes and even cancelled some journeys, despite airline bosses like TUI’s CFO Mathias Kiep and Elevate Jet CEO Greg Raiff suggesting worries about an outright jet fuel shortage are overblown.

Previously, Ryanair boss Michael O’Leary said he wasn’t too stressed, either. “We think the risk of a supply disruption is receding… A month ago, we were saying we’re all fine until the end of May. The fuel companies are now saying they’re seeing no supply disruption risk until the end of June,” he shared.

But speaking to CNBC, the company’s CFO, Neil Sorahan, said the budget airline did have plans should an “Armageddon” scenario arise.

The CFO stressed that the company have hedged 80% of its summer fuel stocks, meaning it’s “not planning for cancellations”.

“We’re in obviously very volatile oil markets at the moment. If we go back a couple of months ago, we probably had some concern around oil supply, but we’re increasingly confident that there won’t be issues in relation to oil into this summer,” he added.

Still, though Ryanair appears pretty secure in its supplies, and while Europe may increasingly source fuel from other countries like Venezuela, the CFO added that he expects fuel prices to remain high.

This, he thinks, might leave already-weaker airlines on even thinner ice, predicting collapse for some.

O’Leary had previously said that if these high prices continue through the summer, “real failures” could happen among European airlines, which “in the medium term, would probably be good for Ryanair’s business”.

More recently, Sorahan said, “do we have plans for some kind of Armageddon situation? Of course, we do, but I don’t see that coming to pass. As things stand, we’re operating a full schedule this summer and plan to operate a full schedule into the winter period”.

O’Leary had previously said that “weaker” than usual demand in June to September could lead to lower fares.

“We can guarantee people there’ll be no price increases, no fuel hedging, no fuel surge levy surcharges, regardless of what happens to summer supply,” he told CNBC.

But Sorahan added that doesn’t mean they’ve ruled out any rises at all.

“We haven’t promised no price increases. Ryanair operates a load active yield passive strategy, which means we price to fill the planes, and the consumers pretty much decide what that pricing is going to be,” he said.