Europe’s biggest budget carrier has said that some rivals may be put out of business by the end of the year, as fuel costs pinch the aviation industry.
The warning from Ryanair bosses came as it released its quarterly profits. The airline posted a 34% drop in profits after tax to €538million (£457million) for the three months to the end of June, hit by soaring jet fuel prices because of the Iran war.
Chief financial officer Neil Sorahan told Reuters that smaller carriers are already struggling.
“A few airlines are on the edge and are going to have a very difficult winter,” he said.
“I wouldn’t be surprised if some fail.”
Sorahan said that the shake-up would cause routes and flights to be cut as airlines crumble under the pressure.
“You’re going to see significant capacity come out of the market this winter,” he said.
“Whatever happens with easyJet, you will see capacity come out over the next year or two.”
Jet fuel prices have doubled to around $150 (£111) a barrel during the quarter due to the Iran war, which sparked in February after the US and Israel carried out joint strikes on several key Iranian sites.
Iran retaliated by striking spots across the Middle East and closing the Strait of Hormuz waterway, through which one fifth of global oil traded passed.
US and Iran entered a short-term peace deal last month, which brought a brief reprieve to energy markets, but oil prices rose again after fighting resumed a few weeks ago.
Ryanair chief executive Michael O’Leary said it is too early to predict how the year will pan out.
He said Ryanair’s results remained “highly sensitive to adverse external developments”, such as escalating conflict in the Middle East and Ukraine, the price of unhedged jet-fuel and European air traffic control strikes, among other factors.
This story originally appeared on Express.co.uk
