Ryanair CEO Michael O'Leary is warning that cheap European flights may not survive much longer if oil prices stay elevated into 2027, a notable reversal from an airline that has built its entire business around keeping fares low through crisis after crisis, according to Fortune. O'Leary said that if oil prices remain high into next year, there will likely be a significant uplift in airfares, adding that the airline would hope to avoid that outcome even as the numbers make it harder to.
Ryanair had hedged 80 percent of its fuel costs at $67 a barrel through March 2027, a level that has kept much of its cost base insulated so far. The remaining 20 percent is exposed to market pricing, and that is where the pain is showing up. Jet fuel in Europe is currently averaging around $180 a barrel, nearly three times the airline's hedged rate. Ryanair already cut winter flight capacity last week in direct response to that unhedged exposure, a rare move for a carrier built on relentless capacity growth.
The pressure is not unique to Ryanair. United and American Airlines are each facing roughly $6 billion in additional annual fuel costs, and the strain traces back to the closure of the Strait of Hormuz during the Iran US conflict, which blocked roughly a quarter of the world's seaborne oil supply and effectively doubled jet fuel prices overnight. European carriers have been hit especially hard, since the region imports roughly half its jet fuel from the Middle East.
The industry's response has already been severe. Lufthansa eliminated 20,000 flights, multiple carriers raised baggage fees to offset costs, and Spirit Airlines stopped operating entirely back in May. Ryanair's warning underscores just how far the fuel shock has spread: even an airline famous for squeezing out every possible cost, from priority boarding fees to strict baggage limits, says its playbook may not be enough to keep fares where passengers have come to expect them if $100 plus oil sticks around.