Ryanair's O'Leary sees no jet fuel shortage in Europe until summer 2027, but prices stay high

Supply assurances

Michael O'Leary, chief executive of Ryanair, told a press conference of the Airlines for Europe association (A4E) in Brussels on Thursday that there is no doubt about the availability of aviation fuel in Europe this winter, or until next summer, unless an unforeseen event occurs. Shortage fears arose because Gulf states, large producers of oil and kerosene, are struggling to export their output during the Middle East war. Oil installations in those countries are being attacked by Iran, itself under attack from the United States, and by the Houthi rebels of Yemen. Ukrainian strikes on Russian refineries add further strain, and Ukraine has been defending itself against a Russian invasion for more than four and a half years. Attacks on refineries and fuel depots, which the sources attribute to Iran and its proxies, are multiplying.

There is no doubt, I think, about the availability of jet fuel in Europe this winter, or frankly until next summer either, unless some unforeseen event occurs.

Prices stay high

Jet fuel prices have risen sharply since March, and O'Leary said the premium over crude has grown well beyond its usual level. He expects prices to stay elevated for the next 12 to 18 months, pointing to Ukrainian attacks on Russian refineries, Houthi and Iranian attacks on Middle East capacity, and shortages in refining, shipping and refinery capacity. Refineries elsewhere in the world are running at full capacity to supply Europe and other continents. Kerosene is quoted at an average of 1,550 dollars a tonne.

Historically, jet fuel was between 10% and 15% more expensive than Brent crude. It is currently priced 50% higher.

Airline sector warnings

Pascal de Izaguirre, who heads the Fnam, the French air transport trade body, and also runs the airline Corsair, gave a similar message in Paris. He said supply security is not a concern for the sector.

We have no concern about supply security. That is already a positive point.

He warned that at the current oil price a number of flights tip into the red, meaning they become heavily loss-making. He said the situation has deteriorated since the military intervention in Iran, citing higher kerosene prices and what he called uninterrupted tax increases. Traditional carriers are better placed than low-cost airlines to absorb the shock.

I will not hide from you that the situation is nonetheless very serious.

Schedule cuts and lobbying

Ryanair announced last month that it would reduce its flight schedule this winter because of higher fuel costs, and it revised its annual passenger target down from 216 million to 214 million.

At the Brussels press conference, executives from Air France-KLM, EasyJet, IAG, Lufthansa and Ryanair pressed the European Union and its member states for measures to improve the competitiveness of European air transport.