An airline executive has revealed that the industry is bracing for a Trump-inflicted jet fuel crisis, calling it a potential “armageddon situation” for airlines that are already struggling.
“Do we have plans for some kind of Armageddon situation? Of course, we do, but I don’t see that coming to pass. As things stand, we’re operating a full schedule this summer, and plan to operate a full schedule into the winter period,” Neil Sorahan, the chief financial officer of European budget carrier Ryanair, told CNBC on Monday.
“I think we will see some of the weaker carriers who were already struggling before the war possibly go to the wall in the winter,” he continued, singling out the bankruptcy of Spirit Airlines as something that could happen in Europe to similarly exposed carriers.
Sorahan said Ryanair was confident it would ride out the crisis, and that Europe more generally was less reliant on the Strait of Hormuz than other regions.
His comments echoed those of the airline’s CEO Micheal O’Leary, who said the high price of fuel was a potential death knell for weaker airlines.
“Some of the flaky competitors in Europe will get taken out in carrier baskets by about September, October,” he told Bloomberg.
That depends on what happens with the Strait of Hormuz, where a blockade until November could spell real trouble.
“Say it stays closed until September, October, November, then we are looking...at airlines failing all over Europe,” O’Leary said.
He said Ryanair would be on the lookout for cheap aircraft and predicted that Europe would “go the way of the U.S. 20 years ago.”
O’Leary said he expected more turbulence for low-cost carriers in the United States because they weren’t really “low cost” anymore, and the demand didn’t exist.
Asked if he would look to pick up a struggling U.S. carrier, he said no. “Absolutely not. We’re too busy expanding in Europe.”
O’Leary said Europe won’t run out of fuel, despite concerns earlier this year that it could.
“It won’t. There was a real concern back in April...There’s no issue over jet fuel supply right now through to the end of September.”
Most of Europe’s jet fuel comes from West Africa, he said.
