Ryanair plans to put squeeze on rivals as fuel costs surge over Ukraine crisis

Ryanair group CEO Michael O'Leary is confident the airline can attract strong bookings over Easter and the summer as it can continue to keep fares low due to being shielded from rising fuel costs.

Ryanair shares gained a boost from group chief executive Michael O’Leary saying the airline can gain an edge over rival carriers as it has largely shielded itself from surging fuel prices arising from the Ukraine crisis.

While Ryanair saw bookings drop 20% after Russia launched its attack, Mr O’Leary said sales have already begun to recover and Ryanair is expecting bumper Easter and summer seasons.

Ryanair is heavily hedged on fuel prices, something which will allow it to keep its prices down while rival airlines are forced to raise fares in the face of climbing fuel costs, Mr O’Leary said.

He said Ryanair’s price advantage should continue to attract customers despite concerns over rising inflation and the cost of living, which is threatening the international travel recovery just as the Covid threat pales.

“People are more price-sensitive and we have the lowest fares,” he said. “We’re in good shape to pass on savings and we’re seeing it in our bookings. There’s a huge number of airlines in Europe that are unhedged.”

Ryanair shares rose by over 2%, helping to lower the stock’s year-to-date decline to just over 7%. One of Ryanair’s largest rivals Wizz Air – which has largely avoided fuel price hedging since the start of the Covid crisis - has seen its shares fall nearly 30% this year.

Ryanair served four airports in Ukraine prior to the war, carrying about two million passengers a year. Mr O’Leary said he’ll redirect planes that flew there from Germany, Poland and Romania to Mediterranean sunspots such as Greece, Spain, Italy and Portugal.

Elsewhere, Aer Lingus owner IAG has said it has not seen any negative impact on its group bookings on the back of Russia’s invasion of Ukraine and said any necessary route diversions are “manageable”. 

The group also owns British Airways and Spanish carriers Iberia and Vueling. IAG chief executive Luis Gallego said the group is confident of a recovery in business and does not need to carry out a rights issue to raise further cash.

IAG last week posted a net loss of €2.97bn for 2021, with nearly €12bn of debt, but said it expects to return to profit in the second quarter of this year. 

Mr Gallego said IAG would be negligent not to look at various scenarios, as the operating climate remains turbulent, but has no plans for a rights issue as it sees bookings recovering.

- Additional reporting Bloomberg and Reuters