Ryanair chief Michael O’Leary said on Monday that the wave of airline failures and sales seen in Europe in recent months would pick up pace in the second half of 2019.
Pointing to the cost of fuel and “fare wars,” O’Leary predicted that the European travel industry would be dominated by four or five large airline groups within the next five years.
“Higher oil prices and lower fares have seen a wave of airline failures and sales in the recent six months, and we expect that trend will continue — and in fact will pick up in the winter of 2019,” he warned.
This will be particularly seen, he said, “among those airlines who are trading unprofitably and particularly those who are unhedged on fuel as spot oil prices rise back over $70 a barrel.”
Many European airlines are already struggling with wafer-thin margins — and the steady rise in oil prices seen since December is adding to their load.
Ryanair, for its part, said that it was 90% hedged for the rest of its current financial year, meaning that it is cushioned from any jump in oil prices.
Pre-tax profits at the low-cost carrier fell almost 30% to €948m (£830m) in the year to March 2019, with the low-cost carrier pointing to a 6% fall in fares.
But fares were low, O’Leary said, because of “excess capacity” in the European market.
“Higher oil prices will see a lot of that overcapacity shaken out this winter and Ryanair will continue to be the structural winner,” he said.
The next four or five years will thus see the emergence of four or five large European airline groups with “much more capacity discipline,” O’Leary predicted.
Airlines such as Flybmi, Wow Air, and Primera all failed within the past few months, while both the embattled Alitalia and Thomas Cook are up for sale.