RYANAIR’S chief executive expects oil to fall below $100 a barrel by the end of next year — after hitting a high of $150.
Ryanair is largely un-hedged for fuel-price increases in the current fiscal year through March 2009, and Michael O’Leary declined to buy hedging agreements for fuel in February, when oil was at about $90 a barrel, saying he expected the price to fall below $80.
Oil is now trading at $133 a barrel, almost double the price last year. Kuwait Finance Minister Mustafa Al-Shimali said in an interview in Isfahan, Iran. A reasonable oil price would be “more or less $100”.
Ryanair said last month that it won’t hedge until prices fall to below $100.
Mr O’Leary, who was speaking at a press conference in Frankfurt, predicts rising oil prices will lead many competitors to go bankrupt while driving more price-sensitive customers its way.
“Clearly, if oil stays at $130 a barrel throughout this winter, there is going to be an awful lot of airline bankruptcies in Europe,” he said.
Analyst at BGC Partners in London, Howard Wheeldon, said it is inconceivable the price of oil will come back to the levels that O’Leary is suggesting.
“Whilst we may achieve a temporary peak around $150-$160 a barrel, and prices may come back a touch, oil is on an inextricable march forward in the medium and longer term,” he said.
Meanwhile Ryanair is adding nine routes to its new base at Birmingham airport.
The routes include services to Alicante, Spain; Kaunas, Lithuania; and Katowice and Krakow in Poland. Ryanair started the Birmingham base, its 25th, yesterday.
The airline wants to roughly double the number of customers it flies annually, as well as its profits, by 2012.
The new Birmingham routes will start in October.
Birmingham Airport’s business development director, Peter Vella said: “We are delighted to be officially unveiling Birmingham Airport as Ryanair’s 25th base, as well as welcoming the announcement of these further nine scheduled routes from the airport. These new services will offer passengers travelling from their local airport even greater choice and flexibility.”
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