Russia’s invasion of Ukraine would not have a significant impact on reservations in Eastern Europe if the conflict does not intensify, Ryanair CEO Michael O’Leary said on Wednesday, March 2nd, adding that the airline was well-positioned to deal with rising oil costs.
Ryanair, like others, halted all flights to and from Ukraine last week as Moscow started a full-fledged invasion of its neighbor.
O’Leary stated that bookings were down 20% on Thursday, February 24 and Friday, February 25, and around 10% over the weekend, but that the short-term harm to demand will be recovered soon.
“I think you will not have a dramatic impact on bookings as long as the period of war doesn’t escalate and spread elsewhere, if nothing untoward happens, I expect (bookings) would be back to normal by next week,” O’Leary told reporters.
He anticipated that individuals in the United Kingdom and Ireland who had chosen domestic holidays in the previous two years would be keen to travel overseas, citing a big spike in demand for flights to and from Polish cities as many Ukrainians seek to reconnect with their families.
“I think you’re going to see families returning to the beaches of Europe this year. They went to the beaches of the west of Ireland and Cornwall last year, and I think they never want to go back there again,” he added.
Airlines that are still attempting to recover from the two-year coronavirus pandemic face a possible threat to their profitability from increasing oil costs, which have surged to moreover $100 per barrel since the invasion.
O’Leary predicted bigger problems for his rivals, saying that Ryanair’s strong recovery from two COVID-hit summers would be driven by our “somewhat fortuitous fuel-hedging strategy, which means we can pass on the benefit of oil at $65 a barrel for almost all of the next 12 months”.
Ryanair is 80% hedged on gasoline until 2023, but rising costs will cost the airline company around €50 million over the next 12 months, according to O’Leary, who also stated that Ryanair will not implement fuel charges over the summer.
O’Leary promised that Ryanair will be the first airline to return to Ukraine when it reopened, which might be this year depending on the level of damage to its airport infrastructure.