Holiday travel chaos fears as Ryanair bosses warn soaring fuel costs could wipe out rival airlines by December

RYANAIR bosses have warned that a handful of rival airlines could go bust by the end of the year as soaring fuel costs pile pressure on the aviation industry ahead of the crucial festive travel period. The stark warning came as Europe’s biggest budget airline revealed its quarterly profits had slumped by more than a third, hit by rocketing jet fuel prices sparked by the war in Iran. Ryanair reported a 34% drop in profits after tax to €538million (£457million) for the three months to the end of June. Chief financial officer Neil Sorahan told Reuters that smaller carriers are already struggling to stay afloat as costs spiral. Sign up for the Money newsletter Thank you! “A few airlines are on the edge and are going to have a very difficult winter,” he said. He added: “I wouldn’t be surprised if some fail.” Mr Sorahan said the shake-up in the industry would see routes and flights axed as weaker airlines buckle under the pressure. “You’re going to see significant capacity come out of the market this winter,” he said. He said the turmoil would continue regardless of the fate of rival easyJet. “Whatever happens with easyJet, you will see capacity come out over the next year or two,” he said. Most read in Money Despite the gloomy outlook for competitors, Ryanair insisted holidaymakers are not being put off booking trips despite the scorching heatwaves gripping Europe this summer. “Seeing no negative impact on booking from European heatwaves,” Mr Sorahan said. He also revealed fares had started to creep back up after months of decline. “We have seen a slight improvement in recent days in terms of fare levels but it is trending down,” he said. Jet fuel prices doubled to around $150 (£111) a barrel during the quarter as the conflict in the Middle East sent oil and gas prices soaring, with the crucial Strait of Hormuz blocked to shipping. An interim peace deal between the US and Iran last month brought some brief respite to oil and energy prices, but they have spiked higher once again as negotiations have broken down and fighting resumed. Ryanair boss Michael O’Leary said the airline had been forced to slash ticket prices to keep passengers flying. “As the Middle East conflict led to consumer hesitancy, concerns about EU jet-fuel shortages, economic uncertainty and later bookings,” he said the airline had reacted by cutting fares. He warned it was too early to predict how the rest of the year would pan out, saying results remained “highly sensitive to adverse external developments, including conflict escalation in the Middle East and Ukraine, the price of unhedged jet-fuel, macro-economic shocks and continuing European air traffic control strikes and mismanagement”. Comment now