Ryanair $RYAAY is now showing quite well why airlines are so sensitive to oil prices.

Ryanair CEO Michael O’Leary said today that if oil remains expensive next year, ticket prices could rise significantly. Brent is now above $100 a barrel, which means rapidly higher fuel costs for airlines.

Ryanair is in a pretty good position compared to some competitors. About 80% of its fuel through March 2027 is hedged around $67 a barrel, so the current price spike won't hit it fully right away. Still, the company has already cut some winter flights and lowered its expected passenger count from 216 to 214 million.

I myself have used Ryanair several times this year, and the low price is, in my opinion, still one of the main reasons people choose it. It will be all the more interesting to see what happens if expensive oil forces even low-cost carriers to raise ticket prices significantly.

It could be worse for airlines that have less fuel hedged. If costs keep rising, they will essentially have two options – raise ticket prices or cut capacity.

And that, in my opinion, is exactly why airlines are so tricky as investments. They can have full planes and strong demand, but a significant rise in fuel costs can quickly change the economics of the whole business.

Does anyone have Ryanair or another airline in their portfolio? And do you think Ryanair can maintain its reputation as a low-cost airline even with expensive oil?