The European aviation industry faces a complex mix of geopolitical tensions, fluctuating commodity prices, and intensified competition in the spring of 2026. Michael O'Leary, the long-time CEO of Irish industry leader Ryanair, issued a stark warning at a recent investor conference in Oslo: Should aviation fuel prices remain at $150 per barrel throughout the summer, several European competitors risk insolvency.
While O'Leary justifies this forecast with economic realities, it also serves to bolster Ryanair's own market strength. Ryanair points to hedging 80 percent of its fuel needs, which is supposed to make the company more resilient compared to competitors like Wizz Air or easyJet. But behind these bold pronouncements lies an industry that, despite record profits at the market leaders, is struggling with structural problems such as delivery delays from aircraft manufacturers and rising operating costs.
The mechanics of fuel prices and market pressure
Fuel costs traditionally represent the largest variable expense for an airline. In a market environment shaped by ongoing tensions in the Middle East, jet fuel prices are highly sensitive to geopolitical news. For low-cost carriers, whose business model relies on extremely low operating costs, an unforeseen price spike can quickly wipe out their already slim margins. O'Leary's observation about the precarious situation of his competitors is not unfounded: as recently as May 2, 2026, the US-based Spirit Airlines was forced to cease operations after rising costs finally shattered an already fragile balance sheet.
Cracks are already appearing in the profitability of some European airlines. Wizz Air reported a net profit of €213,9 million for the 2025 financial year – a decline of over 41 percent compared to the previous year. The drop in operating profit was even more pronounced, plummeting by almost 62 percent. EasyJet also admitted that its financial performance in the first half of the year, despite strong demand over Easter, was impacted by the conflicts in the Middle East and a competitive market environment. Ryanair, on the other hand, reported a profit jump of approximately 42 percent to around €2,54 billion for the first half of the 2026 financial year. These figures illustrate the growing gap between market participants.
Strategic withdrawal and the cost issue at the Berlin location
Despite the financial cushion provided by fuel hedges, Ryanair is not operating entirely detached from market realities. A prominent example of this defensive approach is the closure of its base at Berlin Brandenburg Airport (BER) on October 24th. Officially, the company justifies this move by citing the high airport fees and taxes in Germany, which make the location unprofitable. O'Leary even described BER as the most failing airport in Europe.
Analysts point out, however, that this decision could be part of a broader capacity recalibration. While Ryanair is turning its back on Berlin – though it intends to continue serving the city with aircraft from bases outside Germany – competitors are taking advantage of the gap. Wizz Air plans to increase its capacity in Berlin by almost 280.000 seats, and Eurowings and Condor are also expanding their services. This suggests that Ryanair's decision is less a reaction to a general industry crisis in the city and more an expression of a strict cost-benefit analysis within its own network, under the shadow of global uncertainties.
Challenges beyond fuel costs
The perceived immunity to oil price fluctuations does not protect an airline from operational hurdles. Ryanair is currently facing three main problems: rising personnel costs due to labor disputes, capacity bottlenecks at European airports, and massive delivery delays from manufacturer Boeing. In Spain, flight attendants were legally ordered in May 2025 to repay collectively agreed pay increases, further straining the already tense relationship between management and staff. Strikes by ground staff in Belgium, Portugal, and Spain have been a daily occurrence for years, driving up costs.
Furthermore, Boeing's production problems are slowing the pace of growth. Due to outstanding deliveries, Ryanair has already had to revise its passenger forecast for the 2026 financial year downwards by four to five million passengers. The inability to provide additional capacity during the peak season is hurting the company financially more than short-term fluctuations in the oil price. At the same time, the congestion of European airspace is leading to more restrictive slot allocations at airports such as Amsterdam Schiphol and London Heathrow. In Eindhoven, Ryanair recently lost two valuable takeoff and landing slots due to repeated delays.
Structural differences: Europe versus North America
An interesting comparison emerges when looking across the Atlantic. While the ultra-low-cost carrier (ULCC) model is considered the industry standard in Europe, similar concepts are struggling to survive in North America. Eric Tanner, former CCO of the Canadian airline Flair Airlines, observed that the low-cost model is fundamentally more difficult to implement on the North American continent. However, this is not, as often assumed, due to longer flight distances. In fact, the average route length for Ryanair (approximately 1.020 nautical miles) is hardly shorter than for Flair Airlines (1.066 nautical miles).
The crucial difference lies in the regulatory environment and infrastructure. European airports actively compete for low-cost carriers by offering low landing fees, subsidies for new routes, and cost-effective ground handling. In North America, on the other hand, airports are characterized by high fixed costs, inflexible municipal pricing models, and time-consuming TSA security requirements. Furthermore, North American travelers often prefer bundled services and loyalty programs offered by major network airlines like Delta or United. In Europe, however, low-cost carriers have transformed the market so significantly that traditional airlines like Lufthansa now have to respond with fares like Economy Basic to remain competitive.
Classification: Warning or market psychology?
Michael O'Leary's rhetorical attacks on competitors like Wizz Air and easyJet are part of a proven strategy. By emphasizing his own company's financial stability while simultaneously questioning the viability of others, he strengthens investor confidence and reinforces Ryanair's brand image as a safe haven for price-conscious customers. In the long run, however, even a high level of fuel hedging is only a temporary shield.
The unpredictable developments in the Middle East could permanently disrupt the global oil supply infrastructure. Experts are therefore advising airlines not to rely solely on financial derivatives. Efficient fleet planning, the accelerated retirement of older, fuel-intensive aircraft, and a focus on high-margin core routes are considered more sustainable strategies for weathering economic uncertainties. O'Leary's alarm may be partly exaggerated, but it underscores the need for strict spending discipline in an industry that is as closely tied to global stability as almost any other.