Ryanair Cuts Winter Traffic Target Amid Soaring Fuel Costs
Ryanair has lowered its winter traffic target to reduce exposure to high unhedged oil prices, warning that some of its less well-hedged competitors could struggle to survive this winter amid high fuel costs.
The airline's decision comes as crude oil prices soar due to the Iran conflict, which has reduced deliveries of crude oil and petroleum products from the Middle East. Jet fuel prices have risen significantly, eating into the profitability of all airlines globally.
Ryanair is one of the most hedged airlines, with about 80% of its fuel costs hedged at $67 per barrel. However, the remaining 20% is highly exposed to current jet fuel prices trading at around $140 per barrel.
The airline has cut its winter traffic target from 216 million passengers to 214 million, expecting traffic to be broadly flat year-over-year. Ryanair believes that if high oil prices continue, short-haul airfares in Europe will increase materially to reflect higher oil prices, and some less well-hedged competitors may struggle to maintain capacity or even survive this winter season.