19/09/2008 06:37:00
Falling oil prices will bring respite to many troubled players in the airline industry. However, Europe's largest low-cost carrier - Ryanair - has predicted it will break even if fuel costs stay low.
The Dublin-based airline had initially issued a warning last summer that high oil prices would hurl the company into an annual loss of €60 million (£47.3 million) - its first in 20 years. But Ryanair CEO Michael O'Leary recently assured investors at the airline's annual general meeting in Dublin that they would break even if oil remained at £54.80 a barrel this winter.
O'Leary said that passengers should travel in confidence with Ryanair, who, with cash reserves of €2bn (£1.6bn), is in no immediate danger of going bankrupt. However, in light of recent collapses within the airline industry - including that of Zoom, XL Airways and K&S Travel - O'Leary said he expected more industry bankruptcies over the next few weeks, even with the drop in oil prices.
He told the Guardian: "We believe there will be further airline bankruptcies in Europe over the coming weeks, as more of Europe's non-viable, loss making airlines run out of cash or their credit facilities are withdrawn."
In view of slashed oil prices, Ryanair has reversed plans to increase its fares; O'Leary even revealed that fares may fall further. And while much of the fall in fuel costs will be offset by reduced ticket income, the move will encourage passengers to fly during a Europe-wide economic downturn.
Ryanair put 5 million seats on sale this morning at €5 each, including taxes and charges, in attempts to hit a load factor target of 85%. Major UK airports via which the airline is offering the deal include
Birmingham, Liverpool, Bristol, Glasgow, Edinburgh and London.
