Ryanair hit by wrong way bet on fuel

Ryanair will take an estimated E300m hit this year because of a wrong way bet on fuel prices, which have plummeted over the past month because of the coronavirus pandemic. The airline typically hedges a large proportion of its requirements for jet fuel in advance as an insurance policy to protect itself from rising oil prices. However, it has been caught out by the recent plunge in the oil market as it still has to pay the higher hedge price.  Ryanair on Friday warned it expected to “record ineffectiveness” on its full year 2021 fuel hedges as an exceptional item of about E300m in this year’s results, ending March 31 2020. Daniel Roeska, aviation analyst at Bernstein, noted that high levels of hedging are “working against the company”. He said it will also hit cash in the early part of Ryanair’s 2021 financial year as spot prices below hedged prices mean payments to counterparties.  It comes as the airline said it expected pre-exceptional profit for the year to be at the bottom end of its previous estimate, between E950m and E1b, because of the deepening impact of the coronavirus pandemic.  Ryanair noted that traffic in March fell 48% from 10.9m passengers in 2019 to 5.7m in 2020. This meant full-year traffic will rise just 4% to 149m, down from the forecasted 154m figure the airline said it was on track to achieve even as late as early March.<br/>