Ryanair profits hit €1bn but 3,000 jobs will go

Low-cost carrier, which operates more than 30 routes out Liverpool John Lennon Airport, saw full-year profits soar 13% but is expecting a €200m hit in the coming weeks due to coronavirus. Tony McDonough reports

Ryanair, plane, aircraft
Ryanair says profits have hit €1bn but expects to take a major hit from the COVID-19 crisis

 

Full-year profits at Ryanair have soared 13% to more than €1bn but the budget airline is bracing itself to take a €200m hit from the coronavirus crisis in the coming weeks.

And with no sign of commercial flying getting back to normal anytime soon, due to the COVID-19 restrictions, the company said it had begun consultations about base closures, pay cuts of up to 20%, unpaid leave and up to 3,000 job cuts (mainly pilots and cabin crew) with staff and unions.

The Dublin-based carrier, which operates more than 30 routes out Liverpool John Lennon Airport, also took another swipe at seven rival airlines across Europe who have taken what Ryanair has described as “unlawful state aid”.

Lufthansa, AF-KLM, Alitalia, TUI Group, SAS, Finnair and Norwegian have all taken state aid worth almost €30bn as they battle for survival amid coronavirus lockdown across the continent.

Ryanair said on Monday: “When group airlines return to scheduled flying from July, the competitive landscape in Europe will be distorted by unprecedented quantums of state aid

“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.”

Chief executive Michael O’Leary also hit out at the UK’s proposed 14 day quarantine rule for those arriving the UK, saying the policy had “no credibility” and predicted that it would be gone by June. He told the BBC: “It’s idiotic and it’s un-implementable. You don’t have enough police in the UK.”

Ryanair predicted it could prosper in 2021 and beyond and that some of its struggling rivals would flounder. It added: “As we look beyond the next year, there will be significant opportunities for Ryanair’s low cost, growth model as competitors shrink, fail or are acquired by government bailed out carriers.”

The airline said that its profits for the year to March 31 would have €40m higher had it not been for the disruption from the coronavirus during March, when passenger numbers plummeted by more than 5m.

Michael O'Leary
Ryanair chief executive Michael O’Leary

 

However, during the 12-month period revenues grew 10% to €8.5bn. Scheduled revenue, driven by 4% traffic growth to 149m and 2% higher fares, increased by 6% to €5.6bn. Ancillary revenue rose by 20% to €2.9bn as more passengers chose priority boarding and preferred seat services.

In October, Ryanair Labs launched a new digital platform with improved, personalised, guest offers. This “bedded down well” in the final quarter, prior to COVID-19 groundings, with Labs focusing on improved penetration across core ancillary products.”

The carrier’s fuel bill rose 14% to €2.8bn due to higher prices and 4% traffic growth and it also saw higher staff costs due to increased pilot pay and higher crew ratios as pilot resignations slowed to zero.

It added: “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 full-year guidance at this time.

“The group expects to record a loss of over €200m in the first quarter, with a smaller loss expected in the second quarter (peak summer) due to a substantial decline in traffic and pricing from COVID-19 groundings.”

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