Ryanair shares take off in spite of expected losses from Covid-19 impact

Ryanair shares surged almost 16 per cent on Monday despite the group predicting that it would lose €200 million in the three months to the end of June.

The Irish carrier confirmed the likely loss as it reported that profit after tax in the 12 months ended March 31st, its last financial year, rose 13 per cent to €1 billion.

"The group expects to record a loss of over €200 million in quarter one, with a smaller loss expected in quarter two (peak summer) due to a substantial decline in traffic from Covid-19 groundings," Ryanair Holdings said.

Shares in the group ended the day 15.76 per cent up at €9.782 as markets rose following news on efforts to identify a coronavirus vaccine.

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Ryanair expects to carry fewer than 80 million passengers in the current financial year, which ends on March 31st 2021, close to half the 154 million that it estimated before the pandemic virtually halted flying more than 10 weeks ago.

More than 99 per cent of Ryanair’s fleet is grounded. Last week it announced plans to begin flying 40 per cent of its schedule from July 1st, once measures including temperature checks at airports and a requirement that passengers wear masks, were in place.

Michael O'Leary, Ryanair Holdings chief executive, warned on Monday that a UK government plan to introduce a 14-day quarantine for incoming travellers, barring those from the Republic and France, would further damage the group.

“There are so many exceptions to this. It’s a ridiculous, non-effective measure,” Mr O’Leary declared.

Continuing uncertainty over the pandemic’s duration, combined with no indications of demand or customer behaviour following a return to service, meant the airline was unable to guide markets on profits for this financial year.

Ryanair is in talks with unions on plans to reduce pay by 20 per cent and cut 3,000 pilot and cabin crew jobs. Around 5,500 pilots fly the group’s craft, while it has 9,000 cabin crew. It is reducing staff by 250 across four offices, including Dublin.

The group warned that €30 billion worth of "unlawful state aid" given to rivals such as Lufthansa, Air France KLM, Norwegian and others would render its return to scheduled flying significantly more difficult.

The group believes that these carriers will use the cash to fund mass below-cost selling of flights across Europe.

Ryanair is already challenging agreements by the French and Swedish governments to defer tax due from airlines registered in those countries.

The Irish carrier estimates that to date, German group Lufthansa will receive €12.4 billion from European governments, Air France KLM will get €10 billion, while Italy's Alitalia is in line for €3.5 billion.

Ryanair also highlighted a near €800 million bailout for Austrian Airlines as one of the reasons that it has to cut costs at subsidiary Laudamotion.

The Irish group has warned that it will close Lauda's Vienna Airport base if its management does not achieve the required savings. Ryanair said that its Austrian unit underperformed during the last financial year, while costs were higher than other group carriers.

Its results show that revenues rose 4 per cent in the 12 months to end of March to €8.5 billion from €7.7 billion during its 2019 financial year.

Passenger numbers grew 4 per cent to 148.6 million over the same period. The airline had €3.8 billion in cash at the end of March.

Four airlines make up the group, Irish-based Ryanair Designated Activity Company (DAC), its largest carrier, Air Malta, Buzz in Poland and Laudamotion. Air Malta has taken over Ryanair bases in France, Italy and Germany and now has 120 craft while Ryanair DAC has 275.