Irish budget airline Ryanair warns of higher costs this year if aviation fuel prices remain at their current high level.
Kerosene prices have risen sharply amid the war in the Middle East, putting the profits of many major airlines under pressure this quarter.
The Irish budget airline has hedged 80% of its fuel needs for this year at 67 dollars per barrel.
According to Ryanair, this insurance against rising oil prices will protect profits this year. It also gives Ryanair an advantage over other major airlines, by its own account.
Despite the protection against rising oil prices, the airline's fuel costs have risen by "a few hundred million" euros, said Chief Financial Officer Neil Sorahan in comments to the annual report.
In the past financial year, which closed on 31 March, Ryanair posted a profit of €2.26 billion (excluding exceptional costs), 40% more than the previous year.
Revenue increased by 11%, ending at €15.54 billion, thanks to more passengers and higher ticket prices. Ryanair carried over 208 million passengers (+4%) during the financial year.
In addition to rising fuel costs, Ryanair also expects rising maintenance and personnel costs this year.
It is still "far too early" to provide profit expectations for the current year, the company states, due to high volatility in fuel prices and inventory, and uncertainty regarding the duration of the conflict in the Middle East.
Ryanair hopes to provide its shareholders with a clearer picture of this by the end of July.
The Irish company does, however, state that it expects to transport 216 million passengers in the current financial year, or 4% more than last year.
Demand remains robust, although travellers are waiting longer than last year to book a flight.
The limited increase in capacity will take place in countries such as Albania, Italy, Morocco, Slovakia, and Sweden – "regions and airports that have reduced aviation taxes and are stimulating aviation growth."
In countries such as Belgium, as well as Germany, Austria, and parts of Spain, Ryanair will remove routes because these are "non-competitive markets with high taxes."
Over the past few months, the airline has repeatedly lashed out against the increase in the aviation tax in Belgium, threatening to scale back its operations at Charleroi and Zaventem airports.
