Ryanair is unlikely to hedge its fuel costs before the end of June, as it waits for more clarity on prices amid the war in Iran.
“I don’t think we’ll do any hedging for the next three months,” Ryanair group chief executive Michael O’Leary said. “We would always vary a little bit if we thought there’s a short-term [jump] – clearly nobody’s doing any hedging now with these kind of rates.”
Airlines in general are delaying taking out new jet fuel hedges in the hope that prices will fall in the coming months, in a bet on a swift resolution to the Iran war that leaves them potentially exposed to further increases.
European carriers have hedged about 80 per cent of the fuel they need for this year and typically take out new hedges on a rolling basis to lock in future prices.
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However, after the price of jet fuel doubled following the start of the Iran war three weeks ago, some have paused any new financial contracts.
The price of jet fuel has risen to $180 a barrel, while the gap with Brent crude prices has also widened as the conflict drags on. About 40 per cent of the world’s jet fuel passes through the Strait of Hormuz.
There is a “significant flow from Kuwait, Saudi, Abu Dhabi that is trapped on the wrong side of the straits”, according to one former fuel trader. China, which was one of the largest providers of jet fuel, has also halted exports.
Nevertheless, the markets are forecasting a fall in prices over the year. O’Leary said long-term prices for jet fuel in summer 2027 were still $75 to $80 a barrel: “We’d be greedy and wait until hopefully we can get under $70.”
Lufthansa also said it has paused hedging since the conflict began three weeks ago. Like many of its European rivals, the German carrier said it had locked in about 80 per cent of its fuel costs for this year “at pre-crisis levels”.
Traders expect the prices of both oil and jet fuel to fall in the coming months, giving airlines hope they can lock in lower rates by being patient.
EasyJet chief executive Kenton Jarvis said “fuel is spiking at the moment, but the view of the markets is that fuel comes down in price” in the coming months.
The price of jet fuel stood at about $1,800 a tonne, but will have fallen to about $1,000 by the summer, he said. The question for the airline is “whether it will come down to where it was before: $700 a metric tonne”, he added.
EasyJet expected to pay more when “topping up” its hedges, Jarvis said, adding that the airline had not changed its hedging strategy.
He predicted that ticket prices would begin to reflect higher fuel costs by the end of the summer – but that any long-term impact depended on how long the conflict continued.
John Strickland, an independent aviation analyst, said that carriers ran a “risk” by waiting to strike future deals.
“It’s about locking in certainty, even if they get it wrong and hedge at a high level that turns out to have been high – at least they know for the budget where they stand,” he said.
Unlike their European rivals, US carriers do not hedge fuel at all. United chief executive Scott Kirby said it was preparing for a scenario in which “the Strait stays closed for three months, oil goes to $175, ends the year at $120, and ends 2027 at $100”. Oil rose above $100 a barrel again on Tuesday.
United has already cut some flights in May and June to reflect higher oil prices and was “working on more” reductions further out, Kirby added.
Even though European airlines have hedged, they are still being hit by the need to buy the rest of their fuel on the open market.
Wizz Air boss József Váradi said price increases were “still making an impact” despite its hedging strategy: “When things move sharply, better or worse, that can make an impact on the financials.”
Earlier this month Wizz said it would suffer a €50mn hit to profits because of grounded planes and higher fuel bills. – Copyright The Financial Times Limited 2026
