While the rest of the airline industry is on fire, one carrier is quietly booking record profits.
The reason is not a brilliant route map, a fleet upgrade, or Michael O’Leary’s famously combative press conferences. It is a piece of paper: one that shielded Ryanair from the single risk that has forced airlines everywhere into a sobering reality: that their profitability hangs by a thread on the price of oil.
On May 18th, Ryanair posted a full-year profit of €2.26 billion, up 40%, and is now sitting on nearly €2.1 billion in net cash. All this at a time when jet fuel, the cost item that can swallow a quarter to a third of an airline’s expense base, has turned into the industry’s biggest crisis - causing airlines across Europe, Asia and America to cancel flights, cut market guidance and increase prices by almost 15-40%.
While oil and crude prices have seen a significant rise since the Strait of Hormuz closure, no product has faced as much of a price increase as jet fuel. According to the Argus US Jet Fuel Index, it jumped from about $2.17 to $4.56 per gallon by March 20, 2026. With almost a fifth of the supply trapped in the Middle East, the industry is not dealing with normal oil cycle but with a chokepoint shock. However, Ryanair is still flying a full summer schedule. So what is that trick?
A contract written in calmer times
Ryanair’s trick is called fuel hedging, it works like fuel-price insurance. Instead of waiting to buy fuel at whatever the market price is later, an airline signs contracts in advance to protect itself at a fixed or capped price.
That is what Ryanair did. It locked in 80% of its jet fuel needs through April 2027 at around $67 a barrel. Jet fuel spot prices have spiked above $150/bbl. So while the rest of the market has to price in oil at $120-$140 a barrel and increase air fares and cut profits, Micheal O’Leary and the team at Ryanair can take comfort in knowing that 80% of the oil they consume is pegged at $67 a barrel. Whatever happens to the price of oil, Ryanair can continue offering fares assuming the same arithmetic as before, undercutting the market at a time when other airlines are forced to re-correct.
The structural advantages to this contract, at a time when customers are reeling from price shocks and inflation across the board, from rising travel costs to higher costs at their local grocery, are immense for Ryanair - and have seen Leary point to the fact that this could be a summer when many airlines shut shop if oil remains at the elevated level.
The airlines that bought protection and the ones that bought exposure
Ryanair is not the only airline that hedged fuel, but it is one of the clearest examples of what full protection looks like in a crisis. easyJet has protection too, but at a weaker level. It had around 70% of its summer 2026 fuel hedged at about $706 per metric tonne, roughly $89 a barrel using standard jet-fuel conversion. That gives it breathing room, but it is still not as protected as Ryanair. Wizz Air had hedged 83% of its fuel needs for the year to March 2026, but only 55% for the following year, showing the danger of partial protection: the crisis only needs to outlast your hedge book.
The divergence isn't purely financial, it tracks a deeper split between the two markets. Europe remains LCC-dominated, where Ryanair and easyJet's low fares still drive most of the continent's traffic. In a market built on price, fuel discipline is existential, and hedging is part of that discipline.
America is moving the other way, toward premiumisation. The strain on its budget carriers — Spirit's bankruptcy, the struggles at JetBlue and Frontier — sits alongside legacy carriers leaning harder into premium cabins, lounges and add-ons like Starlink wifi. With a less price-sensitive base, Delta and United have signalled they can pass higher fuel costs straight through to fares without badly denting demand. And when you can charge the customer for the fuel, locking in its price ahead of time matters far less. Hedging becomes optional rather than essential.
The Market Where Fuel Pain Shows Up Fast
Indian carriers face a real reckoning when it comes to jet fuel and rising costs. Adding to the rapidly increasing global fuel costs, India’s higher taxes on ATF and a deteriorating rupee have pushed Indian aviation to the brink.
Air India’s losses have exceeded $2 Billion, SpiceJet is surviving on an emergency government credit line and even the star performer Indigo has swung back to the red with a $26.2 Billion loss in the Fourth Quarter. This despite the Indian government stepping in with a credit guarantee scheme, a price cap on domestic ATF prices and temporarily reducing taxes and airport charges for airlines. Even policy intervention is not keeping up with the increasing pressure of flying with the pricier oil. Indigo has already cut 7-10% of it’s domestic schedule, and nearly 17% of its international schedule. Air India has come in harder, cutting reportedly around 27% international reduction of it’s international flights through to August. Flying is simply more expensive than just keeping them on the ground.
Bottom Line
The Boring Contract That Became Ryanair’s Moat
Ryanair is not immune to the fuel shock. Its unhedged 20% still hurts. But it has already capped most of the damage at the exact moment rivals are being forced to absorb it through higher fares, weaker margins and route cuts. Ryanair did not need to predict the war. It only needed to understand that a low-cost airline cannot afford to leave its biggest cost exposed.
Signed when markets were calm, the contract looked boring. Once the crisis arrived, it became more valuable than an aircraft, a route network, or a summer fare campaign. Ryanair did not just buy fuel protection. It bought time. And in a crisis like this, time is what weaker airlines no longer have.