Ryanair expects a loss of more than €200m in the current quarter, it has revealed in its latest financial report.
The low-cost airline group anticipates carrying less than 80m passengers in FY21 – almost 50 per cent below its original 154m target.
Ryanair’s return to scheduled flying will be rendered significantly more difficult by competing with flag carrier airlines who will be financing below cost selling with the benefit of over €30bn in unlawful State Aid, in breach of both EU State Aid and competition rules.
The carrier said: “FY21 will be difficult for the Ryanair Group as its airlines work hard to return to scheduled flying following the Covid-19 crisis. Unlike many flag carrier competitors, Ryanair will not request or receive State Aid.
“Consultations about base closures, pay cuts of up to 20 per cent, unpaid leave and up to 3,000 job cuts (mainly pilots and cabin crew) are under way with our people and our unions.
“Our commercial team are also in active discussions with our airport partners regarding S.20, and beyond, capacity allocations.
“Given the uncertainty over the impact and duration of the Covid-19 pandemic, coupled with no visibility on what customer behaviour and demand will be following a return to service, Ryanair cannot provide FY21 PAT guidance at this time.
“The Group expects to record a loss of over €200m in Q1, with a smaller loss expected in Q2 (peak summer) due to a substantial decline in traffic and pricing from Covid-19 groundings.”
The majority of Ryanair’s fleet was grounded from mid-March by EU Government flight bans and restrictions, subsequently reducing its March and full year traffic by more than 5m guests and cutting FY20 profits by over €40m.
Ryanair recently announced that it expects to operate less than one per cent of its scheduled flying programme between April and June, with some return to flight services expected between July and September.
The airline added: “When Group airlines return to scheduled flying from July, the competitive landscape in Europe will be distorted by unprecedented quantums of State Aid (in breach of EU rules) under which over €30bn has been gifted to the Lufthansa Group, Air France-KLM, Alitalia, SAS and Norwegian among others.
“We therefore expect that traffic on reduced flight schedules will be subject to significant price discounting, and below cost selling, from these flag carriers with huge State Aid war chests.”
The airline group has reported that full-year profits are up by 13 per cent to more than €1 billion compared to €885m last year, with passenger numbers up four per cent to 148.6 million as sale rose 10 per cent to €8.5 billion.
Ryanair recently raised £600m under the UK’s CCFF. The airline’s current cash balance is €4.1bn and 330 unencumbered B737s (77 per cent of owned fleet).
Since mid-March, the airline group has implemented a series of measures to preserve cash, cut costs, cancel share buybacks and defer operating and non-essential capex spending.
As a result, average weekly cash burn has dropped from approximately €200m in March to just over €60m in May.
“This liquidity will enable the group to weather Covid-19 and emerge stronger when the crisis passes. Our focus will remain on cash preservation/generation and the repayment of maturing debt over the next 24 months,” commented Ryanair.
The group has also said it is committed to its first Boeing 737-MAX-200 aircraft, the delivery of which has been delayed for more than a year.
“We believe it will be at least Oct. before we receive our first MAX-200 aircraft. We remain fans of, and committed to, these “gamechanger” aircraft with four per cent more seats & 16 per cent lower fuel burn, which will transform Ryanair’s cost base for the next decade.
“We are currently reviewing short-term growth plans and are in active negotiations with both Boeing and Lauda’s A320 lessors to reduce planned deliveries over the next 24 months to reflect slower traffic growth post-Covid-19 in 2020 & 2021.”
Visit ryanair.com for more information.