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Find the link to the interview in the comments below (this sub bans YT links in posts).
During an interview for Bloomberg, Michael O'Leary, CEO of Ryanair, low-cost European airline, said:
>*"At Ryanair, we typically hedge 80% of our fuel. We're 80% hedged out to March 2027, $67 a barrel. We're in great shape. Apart from the fact that our share price has tanked in the last 2 weeks, because everyone is like 'Oh, they're an airline'. We just reported full year results, 208 million passengers, 2.26 billion Euros profit after tax, spitting off cash to shareholders, share buybacks."*
>*"Some of the flaky competitors in Europe will get taken out in carrier baskets by about September/October, because they're not hedged on oil and they're borrowed up to their eye balls in net debt."*
>*"There is nothing in Europe you would want to buy. It's all crap. It will go bust, you know, in the not too distant future."*
>*"Ryanair will continue to dominate the short haul space in Europe because we have much lower fares and much lower cost. We're the only really low fare low cost carrier in Europe. There's a few other low fare not so low cost carriers in Europe, but they're all going to go the same way as Spirit and Frontier in the States."*
>*"I think there's a real sea change this year of people who would historically have gone to The Middle East, or using The Middle East carriers to connect to long haul, probably going to stay at home in Europe this summer."*
>***"\[Reporter's question: When will Europe run out of jet fuel?\] It won't. There was a real concern back in April. There was real worries over supply, jet supply. We met all of our fuel suppliers in Paris last week. There's no issues over jet fuel supply right now through to the end of September. Most of Europe's Jet A-1 supply comes from West Africa, The Americas, Norway, and the lifting of Russian sanctions has also eased the supply of Jet A-1 into Eastern European countries."***
>*"I'm very concerned about the price of oil. But I don't believe the conflict in Iran will have any disruption on European jet supplies."*
>*"The question for us is 'How long will the Strait of Hormuz remain closed?'. If it remains closed until March 2027, because of our own hedge, our unit cost might rise mid-single digits this year."*
>*"We bought 80% of our jet fuel requirements out to March 2027 at $67 a barrel. So we're in great shape."*
>*"If the Strait of Hormuz stays closed until September, October, or November, then our unit cost will be up about 5%."*
>*"\[Reporter's question: Which airlines are failing?\] Air Baltic, which was recently bailed out by the Latvia government which gave it a 30 million loan to get them from June through to August. But they have to repay the loan in August. I mean good luck with trying to get that repaid at the end of August."*
I tend to agree with him on this.
Though, I've seen people argue that their hedge on jet fuel doesn't mean much if the global supply of jet fuel stops... Which is true. But as he mentioned, Europe's jet fuel supplies come from US, Norway and West Africa, so it shouldn't be impacted.
But still... why is everyone panicked about this summer's airline travels in Europe, then?
What's your opinion on this? What do you think about his statement?