According to Check-in.dk, Wizz Air CEO József Váradi warned that a number of European airlines may be forced to declare bankruptcy by next September if jet fuel prices remain at their current high levels, while emphasizing that Wizz Air is not facing a liquidity crisis.
Statements about increasing pressure on airlines
The source quoted József Váradi as saying that the current global situation is pushing airlines in Europe to reduce ticket prices in order to stimulate demand, at a time when some travelers are hesitant to make reservations due to economic and geopolitical conditions.
According to the Daily Star, Faraday indicated that airlines with weak liquidity may find themselves forced to halt operations before September if jet fuel prices remain high.
He explained that the expected slowdown in bookings at the end of the summer season is already putting pressure on airlines, saying: “All airlines are currently selling based on summer demand, which is the period with the highest prices during the year, but the momentum is declining towards the end of June.”.
He added in comments to The Telegraph that airlines usually face the risk of bankruptcy twice a year, in September and February, explaining that companies with weak liquidity will be under enormous pressure as September approaches.
Flights reduced to address fuel crisis
The source reported that some airlines have already begun taking measures to address the current fuel crisis, including the Lufthansa Group, which decided to cancel 20,000 summer flights within Europe after short-haul flights became unprofitable due to rising fuel costs.
The report explained that these cancellations will save about 40,000 tons of jet fuel, and include flights departing from Frankfurt, Munich, Zurich, Vienna, Brussels and Rome.
Fuel prices soar to record levels
The price of a ton of jet fuel last week reached about US$1,400, equivalent to about 8,900 Danish kroner, which is double the price recorded during the same period last year, according to data from the International Air Transport Association’s Jet Fuel Monitor.
British demands for urgent government action
Airlines UK has called on the British government to take urgent action to prevent further disruptions to the aviation sector.
The organization called for increasing fuel reserves by raising kerosene production in oil refineries, in addition to increasing imports of American Jet A fuel used in aviation.
The organization also called on the British government to cut taxes and temporarily relax some environmental regulations in order to support airlines in the face of the current crisis, according to the source.
Expectations are that the crisis will continue to have a long-lasting impact even with the reopening of the Strait of Hormuz.
József Váradi indicated that he expects the impact of the war between the United States and Israel on one side, and Iran on the other, on jet fuel prices to continue for a long time, even if the Strait of Hormuz is reopened to shipping.
Faraday's comments came after Ryanair Group CEO Michael O'Leary said that Wizz Air and airBaltic could face the risk of running out of cash before the end of winter as a result of soaring fuel prices.
O'Leary added that Ryanair's fuel costs rose by £50 million in April, equivalent to about 432 million Danish kroner.
Accusations of failing to hedge against rising prices
According to the source, Michael O'Leary attributed his concerns about Wizz Air and airBaltic to the fact that the two companies had not hedged against rising jet fuel prices before the crisis erupted, believing that this could lead to their collapse during the coming months of October or November.
But József Váradi rejected these claims, asserting that Wizz Air has no cash flow problems and that the company has financial reserves of two billion euros, or more than 15 billion Danish kroner.
A wider crisis hits the aviation sector
The current fuel crisis comes at a time when the global aviation sector is facing increasing pressure as energy prices continue to rise and concerns about supply disruptions grow, along with geopolitical tensions that directly affect operating costs, ticket prices and global travel, according to the source.
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