Rising Fuel Costs Put European Airlines at Risk of Restructuring

Higher fuel prices and renewed tensions in the Middle East are increasing financial pressure on weaker European airlines, raising the likelihood of restructurings, mergers, and acquisitions across the sector.

According to Reuters, British low-cost carrier easyJet is reportedly close to a takeover led by U.S. investors that could take the airline private at a valuation well below its pre-pandemic peak. Meanwhile, Latvia’s airBaltic is seeking short-term financing to avoid default, while Norway’s Norse Atlantic Airways is reviewing its business strategy as financial challenges mount.

Financial advisory firm Interpath said it is currently working on restructuring plans for four to five major European airlines. Although the industry strengthened its finances after the pandemic, rising fuel costs have exposed weaknesses in some carriers’ balance sheets, forcing them to consider restructuring, asset sales, or bankruptcy protection.

The global aviation industry recently cut its 2026 profit forecast by nearly half due to higher fuel costs and disruptions to key air routes linked to the conflict in the Middle East. Fuel can account for more than one-third of an airline’s operating expenses when oil prices rise, placing additional strain on companies with already thin profit margins.

Airlines are also scaling back expansion plans, while Airbus has lowered its long-term passenger aircraft demand forecast. Analysts warn that smaller carriers face the greatest risk, particularly after the busy summer travel season when revenue typically declines.

Potential takeover targets include Poland’s LOT Polish Airlines, while analysts also see Wizz Air as a possible acquisition candidate despite the company saying it has sufficient liquidity. Wizz Air CEO József Váradi expects more airline bankruptcies by the end of the summer but believes his airline could benefit by acquiring routes from struggling competitors.