O’Leary (Ryanair): “Record increases in airfares, up to 20 per cent higher by 2027”

The lack of sufficient financial reserves leaves airlines more vulnerable to further rises in the price of oil and aviation fuel. Against a backdrop of rising operating costs, airlines will therefore have to strike a balance between the need to raise prices and the need to avoid undermining demand.

The sector is therefore facing a challenging period: travellers continue to show a willingness to spend on air travel, but rising energy costs, taxes and other expenses risk reducing the profitability of routes.

The bleak outlook for the aviation sector is also reflected in share price performance. Ryanair fell by as much as 2.1 per cent during the trading session mentioned by O’Leary, bringing its year-to-date decline to 25 per cent. Should the decline continue, 2026 would be the worst year for the share since 2018. During the press conference, the CEO also strongly criticised the regulatory and fiscal framework in certain European markets. In France and Belgium, he reiterated, Ryanair will scale back its operations in response to tax increases, in a context where cost pressures are making certain activities less sustainable.

According to O’Leary, the combination of higher fuel prices, taxation and operational difficulties will accelerate consolidation within the sector. The weakest companies, lacking sufficient resources to absorb these shocks, will be exposed to greater financial risks and may be forced to restructure or consider extraordinary measures.

Recent developments confirm the tensions in the European market. Air Baltic and the Spanish airline Volotea are undergoing restructuring, whilst the sector is seeing increasing activity in the acquisitions market. Lufthansa has beaten Air France-KLM in the race to acquire a stake in TAP, the Portuguese national airline. Meanwhile, in the United States, the private equity group Apollo Global Management is mapping out a possible plan to take over EasyJet.

The rise in the cost of aviation fuel is one of the most immediate economic consequences of the conflict with Iran, which began at the end of February. The crisis has heightened uncertainty over supplies and has contributed to making operations more costly for airlines worldwide.

Ryanair’s results were also affected by the tensions. The latest quarterly figures cited by the manager, published in July, highlighted the conflict’s negative impact on profits, alongside bookings made closer to the departure date, against a backdrop of concerns over the availability of aviation fuel.

The change in booking habits represents a further source of uncertainty for airlines, which must plan capacity and pricing in a less predictable environment. If costs continue to rise, managing profitability will become even more challenging.

On the operational front, O’Leary finally confirmed the target of taking delivery of the first Boeing 737 Max 10 in January, with a further 16 deliveries scheduled by April. The arrival of the new aircraft represents a key milestone in the Irish airline’s development plans, as it aims to strengthen its operational capacity. However, in the short term, the outlook for the entire sector remains dominated by energy uncertainty and the ability to pass on rising costs to final fares.