Going for Growth

Here's why Ryanair flights may get even cheaper

Michael O'Leary, chief executive officer of Ryanair Holdings Plc
Matthew Lloyd | Bloomberg | Getty Images

Tumbling oil prices might worry commodity producers, but could also mean cheaper flights for European vacationers—at least for those traveling with Ryanair, the Irish budget airline.

Michael O'Leary, the sometimes controversial CEO of Ryanair, said that cutting air fares would be "very good" for the company's growth.

He explained that most European airlines had tried to hedge the slump in oil prices, attempting to cover themselves from any potential losses due to price changes by using financial instruments.

However, as oil was currently trading at higher prices than at where some airlines had hedged, companies such as Ryanair could soon have some spare cash in the pipeline.

"As oil prices fall or hedge prices fall, Ryanair expects to pass on that in the form of significantly lower air fares to our customers—that'll be very good for our growth," O'Leary told CNBC at a conference on tourism in Madrid on Thursday.

Gas-guzzling airlines are seen as one of the major beneficiaries of cheaper oil. Airline stocks have rallied as light crude oil has fallen to $55 from around $115 a barrel since June.

Transatlantic still possible

Ryanair was forced to backtrack last month on plans to introduce low-cost transatlantic flights, issuing a statement denying that its board had approved the plan.

On Thursday, O'Leary said the airline was still considering offering flights between U.S. and European cities, but that challenges remained.

"The blockage is that we can't secure a fleet of long-haul aircraft cheaply in the current market place and until we can identify or secure a fleet of aircraft it's just a plan," he said.