Airline industry executives are bracing for a worst-case “Armageddon” scenario under President Donald Trump as the Iran war is threatening critical shortages of jet fuel — and they expect that if things get worse, the industry could see more liquidations similar to what happened to Spirit Airlines earlier this year.
According to the Daily Beast, European budget carrier Ryanair’s CFO Neil Sorahan told CNBC, “Do we have plans for some kind of Armageddon situation? Of course, we do, but I don’t see that coming to pass. As things stand, we’re operating a full schedule this summer, and plan to operate a full schedule into the winter period.”
He did acknowledge that “I think we will see some of the weaker carriers who were already struggling before the war possibly go to the wall in the winter,” pointing particularly at carriers in Europe.
The Iran war has resulted in a near-shutdown of the Strait of Hormuz, a critical shipping lane at the Persian Gulf through which 20 percent of the world’s oil transits. The most visible impact has been a surge in gas prices, but all petroleum products, including jet fuel, have been affected.
The Spirit liquidation, which came after years of struggles and multiple bankruptcies, was resisted by the Trump administration, which tried to secure a bailout for the ultra-low-cost carrier that would have seen the federal government acquire up to 90 percent stake. This deal ultimately did not go through because some of Spirit’s major creditors objected.
There is no current end in sight to the Iran war, which has seen unsteady periods of ceasefire but no major move toward reopening the Strait of Hormuz to its previous capacity.
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