Ryanair Locked in Fuel at $77 a Barrel. Now Its Rivals Face the Price Shock

Ryanair bought most of its protection against the 2026 fuel shock before the shock began. Months before the war with Iran started at the end of February, the airline had agreed prices for the bulk of the jet fuel it would burn through March 2027. Since then, jet fuel has more than doubled, averaging $190.18 a barrel in the week ending October 9, up 111% from a year earlier. Ryanair's rivals are paying that price now. Ryanair mostly isn't, yet.

What "Locking In" Fuel Actually Means

Airlines can't control oil prices, so many buy price protection in advance. That's called fuel hedging. The airline agrees today to pay a set price for fuel it will use months or years from now. It wins if the market climbs above that price and loses if the market falls below it.

In January, CEO Michael O'Leary said Ryanair was 84% hedged at $77 a barrel for the current quarter, with about 80% of its next year's fuel locked at roughly $67.

Those hedges were built in 2025, not in a panic. Ryanair had 36% of its 2027 fiscal-year fuel covered at just under $66 in July 2025, and by November it was 80% covered at just under $67. That fiscal year runs from April 2026 to March 2027, so the war arrived after the contracts were signed.

It was a bet, and bets can go wrong. When oil collapsed in 2020, Ryanair took a profit hit of about €300 million because it had locked in prices above the market.

Who Is Paying the Full Price

Ryanair is the exception. IATA estimates airlines worldwide have hedged roughly one third of their expected 2026 fuel. In the US, Delta, American and United abandoned hedging roughly a decade ago, arguing that premiums and accounting volatility outweighed the benefits. Southwest, long the most committed US hedger, ended its program in early 2026, according to the same report.

Delta shows what that looks like. On October 9, it cut its 2026 profit outlook, expecting $6 billion in added fuel costs. Third-quarter fuel expense rose 62% to $4.1 billion, and it now guides to adjusted earnings of $5.10 to $5.60 a share, down from $6.50 to $7.50 in July.

Delta owns a refinery near Philadelphia, which is the closest thing a US airline has to a hedge. It's expected to contribute about $700 million this year but only partly offsets the increase, and it posted an operating loss of $33 million in the September quarter after an outage.

Europe is better protected, though unevenly. easyJet hedged 84% of its first-half 2026 fuel and Lufthansa 77% for the year. Ryanair said in August that less well-hedged competitors may struggle to keep capacity or even survive this winter.

The Shield Has an Expiry Date

Ryanair's own protection runs out in March. On October 20, O'Leary said only 15% of next year's fuel is hedged at $85 a barrel, adding "Basically, we're unhedged into the summer of 2027."

Hedging didn't make Ryanair immune either. It has cut around two million seats from its winter schedule, partly because of fuel costs, even with most of its fuel covered. O'Leary says it will still be profitable but less so if oil stays high, and he warns European fares could rise 10 to 20% next year. That's a forecast from the airline's chief executive, not a market consensus. Note also that the $85 on next year's fuel sits well above the roughly $67 on its current book.

Why It Matters

Hedging doesn't remove fuel costs. It moves them to a different date. Ryanair spent the first year of the shock paying 2025 prices, a real edge over carriers paying market rates now. By its own CEO's account, the bill arrives in April. The airlines that look weakest today and the one that looks strongest face the same price, just on different calendars. For travelers, that means fares are likely to keep rising, whichever airline they book.