Ryanair CFO warns weaker European carriers may not survive jet fuel crunch

Ryanair has prepared for an “armageddon situation,” amid the jet fuel crisis, the budget airline’s chief financial officer told CNBC Monday.

“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 told CNBC’s Ritika Gupta in an interview.

“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,” Sorahan said after the airline reported full-year earnings.

The carrier has hedged 80% of its summer fuel at $668 per metric ton, citing “economic uncertainty” caused by the Middle East conflict and the ongoing blockade of the Strait of Hormuz. Sorahan said the airline is “not planning for cancelations.”

“We’re in obviously very volatile oil markets at the moment. If we go back a couple of months ago, we probably had some concern around oil supply, but we’re increasingly confident that there won’t be issues in relation to oil into this summer,” Sorahan said.

He explained that Ryanair is not “overly concerned” about jet fuel supply as Europe’s dependence on the Strait of Hormuz is declining, with suppliers now getting oil from the likes of the U.S., Venezuela, and Brazil, among others.

“That said, I think prices will remain higher for longer, which puts Ryanair in a particularly strong position, given our strong fuel hedging,” Sorahan said.

Ryanair reported a 40% increase in profit after tax to nearly 2.3 billion euros ($2.7 billion) in the year ending in March, while passenger traffic grew 4% to 208.4 million. Meanwhile, its revenue fell 11% to 15.54 billion euros.

This is a breaking news story. Please check back for updates.