Airlines’ growth sunshine jars with fuel storm

Ryanair Holdings

12/05/2026 10:45

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. Updates to add graphic.

By Oliver Taslic

LONDON, May 12 (Reuters Breakingviews) - European airlines’ plans run counter to the news. With the Strait of Hormuz halfway through its third month of effective closure, credible sources like the International Energy Agency have warned the continent could see jet fuel shortages at select airports as early as June. Yet intra-Europe flying is scheduled to rise over 5% this summer, according to data from aviation analytics firm Cirium.

Hormuz has pushed European jet fuel prices up to around $1,300 a metric ton as of Tuesday, 60% above pre-war levels. Crude prices 50% above February levels risk whacking economic growth, to which air travel demand is closely tied. In turn, carriers including Tui TUI1n.DE and easyJet EZJ.L have warned cautious consumers are delaying bookings. One might therefore assume Europe’s airlines would fly less this summer and thus boost pricing power, save fuel and potentially protect margins.

There are plenty of reasons why they aren’t. The peak summer season is when many airlines make most of their annual earnings. Carriers’ extensive fuel hedging partly shields them from soaring costs. And cutting routes too quickly could gift market share to rivals.

In any case, the CEOs of airlines including Ryanair RYA.I, British Airways owner IAG ICAG.L and Wizz Air WIZZ.L have all in recent weeks struck positive notes about fuel supplies, with the latter two noting booming U.S. output. U.S. jet fuel exports between January and April this year were 82% higher than in the same period of 2025, Reuters reported citing Kpler data.

That will partially offset Gulf shortages. Even so, a sector offering more flights to nervier consumers could be a recipe for weaker ticket prices. At Ryanair, Europe’s largest airline by passenger numbers, CEO Michael O’Leary said last month that average fares could be flat in the year to end-March 2027, rather than growing 4%-5% as previously forecast.

Long-haul routes look somewhat sunnier. Pricier fares mean higher fuel costs make less of a difference, and first and business class passengers are less price sensitive. On key North Atlantic routes, major U.S. rivals don’t hedge fuel purchases and will have little choice but to increase fares, giving Europeans cover to do the same.

Still, long-haul players are hardly immune. While Deutsche Lufthansa LHAG.DE reckons it can deliver “significantly” higher operating profit this year than in 2025, analysts are more sceptical. According to forecasts compiled by Visible Alpha, they pencil in a 7% operating profit decline for 2026.

In other words, carriers have some grounds to downplay the great 2026 jet fuel crunch. But in general they still risk having insufficient or pricier fuel just as European consumer confidence takes a dive. Many sector players have struggled to climb above pre-pandemic price-earnings multiples. Given their logical destination is lower profitability, there’s little reason for that to change.

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CONTEXT NEWS

Wizz Air said on May 12 it expected to report a breakeven to slightly positive net profit for the year ended March 31, 2026, an improvement on previous guidance.

The airline credited the improvement to stronger underlying revenue and a “well-hedged macroeconomic mix”.

For the first half of its 2027 financial year, Wizz said current scheduled capacity stood at around 51 million seats, up 28% year-on-year, with forward bookings 44% sold, up 2 percentage points year-on-year.

However, Wizz also said that “to maintain this booking momentum and protect load factors amid geopolitical uncertainties, we have strategically utilized promotional fares to stimulate demand” during the period.

Shares in Wizz were up 0.5% at 0805 GMT on May 12.

Ryanair aside, many European airline shares have struggled for altitude https://www.reuters.com/graphics/BRV-BRV/lgvdgbldxpo/chart.png

(Editing by George Hay; Production by Streisand Neto)

((For previous columns by the author, Reuters customers can click on TASLIC/oliver.taslic@thomsonreuters.com))