Revenue and profits plunge in ‘most challenging’ quarter in Ryanair’s history

Group describes the prospect of a second wave of Covid-19 as its ‘biggest fear’ right now

American television network CNBC reports on Ryanair's quarterly results, but finds more entertainment value in the comments of outspoken CEO Michael O'Leary. Video: CNBC/Reuters

 

Revenue at Ryanair plunged 95 per cent during the first quarter of the year as it reported a first-quarter loss of €185 million compared to net profit of €243 million during the same period last year.

The airline, in a quarterly update, said the period had been “the most challenging” in its 35-year history.

The coronavirus pandemic grounded the group’s fleet for almost four months from mid-March to the end of June as EU governments imposed flight or travel bans and widespread population lockdowns.

Ryanair resumed flights across the majority of its route network on July 1st, and said it expects to operate about 40 per cent of its normal July schedule, rising to about 60 per cent in August and 70 per cent in September.

Ryanair’s customer service teams returned to the office in June and are working through an “unprecedented volume” of customer emails and other communications related to flight changes and coronavirus cancellations.

“This process has been delayed by unauthorised screen scrapers providing falsified customer details at the time of booking,” the airline said.

Refund requests

“It is expected that over 90 per cent of customer cash refund requests will be cleared by the end of July.”

Ryanair said that as of now it expects full-year traffic for 2021 to fall by 60 per cent from 149 million to just 60 million.

Revenue fell by 95 per cent from almost €2.2 billion to just €125 million as traffic dropped 99 per cent to just 500,000 passengers.

An 85 per cent reduction in costs during the quarter was not sufficient to offset this revenue loss as bookings came to an abrupt standstill in the initial weeks of the coronavirus crisis.

“The group has negotiated modest pay cuts with our people and their unions that will, hopefully, help to avoid widespread job losses,” Ryanair said.

“Discussions are ongoing with aircraft suppliers to reduce aircraft lease rates and purchase prices to reflect the new post Covid-19 reality.”

In an update about the Boeing Max, Ryanair said Boeing has indicated a late third-quarter return to service in the US for the B737-Max, allowing Ryanair to accept delivery of its first Max-200 before the end of 2020 and potentially up to 40 ahead of 2021.

“We remain committed supporters of these gamechanger aircraft which have 4 per cent more seats, 16 per cent lower fuel burn and 40 per cent lower noise emissions,” it said.

“These new aircraft will enable the Ryanair group to grow to 200 million passengers per annum over the next five or six years while reducing the group’s cost base and significantly lowering its environmental footprint.”

Ryanair said its balance sheet is “one of the strongest in the industry” with over €3.9 billion cash at June 30th.

“Since mid-March, the group has moved quickly and smartly to preserve cash, cut costs, cancel share buybacks and defer all non-essential capex,” it said. “This has protected the group’s very strong liquidity position as it returns to flying in July.”

Trade deal

Elsewhere, the airline said the threat of a no-deal Brexit “remains high” and said it hoped the UK and Europe will agree a trade deal for air travel which will allow the free movement of people and the “deregulated airline market between the UK and Ireland to continue”.

“As an EU airline, the Ryanair group should be less affected by a no-deal Brexit than UK registered airlines,” it said.

“We still, however, expect adverse trading consequences to arise. Ryanair has put the necessary measures in place to ensure that the group remains majority EU owned, including restricting voting rights of non-EU shareholders, in the event of a hard Brexit.”

In terms of outlook, the airline said 2021 “will be a very challenging year” for the Ryanair group.

“It is impossible to predict how long the Covid-19 pandemic will persist, and a second wave of Covid-19 cases across Europe in late autumn when the annual flu season commences is our biggest fear right now,” it said.

“Hopefully EU governments, by implementing effective track and tracing systems, and EU citizens by complying with recommended face masks, rigorous hand hygiene and other measures, will avoid the need for further lockdowns or restrictions on intra-EU flights.”

The group currently expects to carry about 60 million passengers in 2021 and expects to record a smaller loss in the second quarter.