RYANAIR CHIEF executive Michael O'Leary has said the budget airline will only manage to break even this year if oil remains over $130 (€81.80) a barrel.
The doubling of the price of oil within a year would make things more difficult but not impossible for Ryanair, he said, while many smaller operators are likely to go to the wall.
"In the case where the price of oil stays over $130, we expect that our profits will fall from €430 million in 2007 to zero this year," said Mr O'Leary to the German newspaper Die Zeit.
In a special report, The End of the Budget Airline, the weekly newspaper reported that German tour operator TUI is paying €12,000 to fill one of its Boeing 737 tanks, compared with a price tag of €5,000 three years ago.
For a dozen smaller European operators like Skyeurope, Wizz Air or Clickair, the rising fuel prices could be a kiss of death.
"If the price of oil stays at $130, many of these companies will go under," said Mr O'Leary.
"Many of them were losing money when oil was $70 a barrel."
As well as the challenge of rising fuel prices, O'Leary suggested that Ryanair will face fresh challenges by the end of the decade, when he plans to stand down as chief executive.
"I create a lot of cheap publicity for the airline, negative publicity too," he said.
"When I go in two or three years, that's the chance for a change of image. Then we will be Europe's largest airline and should perhaps be a little less aggressive in our dealings with politicians and competitors."
That would be a new departure for the airline: the combative Mr O'Leary has picked high-profile rows with nearly every leading European airline as well as several prime ministers, notably former taoiseach Bertie Ahern.
Despite the difficult operating circumstances, Ryanair will take delivery of 40 new aircraft in February or March, while another 120 are on order.
"With the weak dollar, these planes are only half the price of five or six years ago," said Mr O'Leary.
He said Ryanair saw lots of room for expansion in Europe, in particular in Germany.
"We could easily open three or four more bases," he said.
"Munich and Berlin would be a good fit, but the airports there have to want us. We won't fly there without an efficient low-cost service."
