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 closure of this vital waterway represents one of the most significant disruptions to global energy markets in recent history. Jet fuel prices, which are directly tied to crude oil prices, have surged dramatically since Iran’s blockade began. Airlines operating on thin profit margins — particularly budget carriers — face unprecedented fuel costs that threaten their viability. Major carriers with more diversified revenue streams and financial reserves can absorb these increases, but smaller operators lack such cushions.
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.
Spirit’s collapse highlighted the vulnerability of budget airlines, which operate with minimal profit margins and depend heavily on fuel efficiency and low operating costs. The carrier had struggled for years with aging aircraft, customer service complaints, and debt obligations. However, the final blow came from external pressures — including fuel costs and reduced travel demand — that tipped the already-fragile airline into liquidation.
Analysts warn that if the Iran war continues indefinitely and jet fuel remains scarce or prohibitively expensive, the airline industry could face a cascade of failures similar to what occurred during the 2008 financial crisis. Industry observers note that while legacy carriers like American, United, and Delta have diversified business models and access to capital markets, regional carriers and ultra-low-cost operators face existential threats.
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. Aviation experts say prolonged disruption could fundamentally reshape the global airline landscape, potentially consolidating the industry further and reducing competition on key routes.