Ryanair to tap bond markets as it reports €815m loss

Ryanair will tap bond markets for extra cash as its prepares for a recovery in air travel on the back of Europe-wide vaccination programmes.

The Irish airline group reported a record annual after-tax loss of €815 million on Monday after Covid-19 restrictions forced it to scrap over 80 per cent of flights. But the airline said there were signs the recovery had begun.

Speaking after it published results, chief financial officer Neil Sorahan said the group hoped to tap the eurobond market in coming days though he did not indicate how much it planned to borrow.

The carrier last year raised borrowed €850 million in eurobonds as part of a €1.95 billion cash raise. Chief executive Michael O’Leary said Ryanair intended to take advantage of the “favourable” interest rates and financing terms available from capital markets.

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Mr Sorahan said the airline had cash of €3.1 billion, while 85 per cent of its fleet, worth €7.5 billion was “unencumbered” meaning it is not being used to secure any debt.

Mr O’Leary noted that Ryanair had gone cashflow positive following a year in which widespread travel restrictions had drained some of its resources. “We expect that that will continue through the summer,” he added.

Europe’s largest discount airline flew 27.5 million passengers in its financial year to March, down from 149 million the previous year in what it called the most challenging in its history.

The airline reiterated its forecast that passenger numbers for the current fiscal year would be towards the lower end in the range of 80 million to 120 million passengers. It expects to fly just five million to six million passengers in the April-June quarter.

Ryanair said it was impossible to give a formal profit outlook for the year, but added that it “cautiously believed that the likely outcome for FY22 is currently close to breakeven” if the EU vaccine rollout remains on track.

Mr O’Leary said in a pre-recorded presentation that recent strong increases in weekly bookings suggested the “recovery has already begun” with bookings climbing from around 500,000 per week in early April to 1.5 million a-week now.

“If, as is presently predicted, most European populations are vaccinated by September, then we believe that we can look forward to a strong recovery” in the second half of the year, from October to March, Mr O’Leary said.

The annual loss was slightly better than the loss forecast of €834 million in a company poll of analysts. “It’s better than we predicted, but still a fairly traumatic loss for an airline that has been consistently profitable for our 35-year history,” Mr O’Leary said.

Meanwhile, the Ryanair chief warned there was a risk that Ryanair would not receive any of the 14 Boeing 737 Max aircraft from the US carrier before this summer.

The airline has ordered 210 of the new jets and had hoped to receive 14 at the beginning of the month. However, Mr O’Leary said that Boeing had postponed delivery several times, so they were now due on May 26th.

He blamed management at the US giant's factory in Seattle, whose response to regulators and customers he dubbed "abysmal". However, Mr O'Leary told analysts that he believed the problem was short term. "I do believe it will be resolved and we will have 60 delivered on time for summer 2022," he added. – Additional reporting Reuters