Wednesday, 8 Jul 2020

Ryanair announces €1bn profit but forecasts deep losses

Europe’s biggest budget airline says it expects to fly barely half the planned number of passengers in the current financial year due to the coronavirus pandemic.

Ryanair predicts passenger numbers in April, May and June will be just 1 per cent of the original expectation, with no more than half of its expected summer traffic of 45 million passengers in July, August and September.

The Irish airline is currently operating only 30 flights a day, compared with well over 2,000 daily departures it had originally planned.

Download the new Independent Premium app

Sharing the full story, not just the headlines

The Dublin-based carrier expects to lose €200m (£179m) in each quarter, and has taken a €353m (£316m) hit in the shape of a “hedge ineffectiveness charge” – the loss from fuel contracts Ryanair signed at a much higher price and for fuel it no longer needs.

The forecasts were provided as Ryanair announced its full-year results for the financial year ending on 31 March 2020.

The airline made a profit of €1.002bn (£896m), an increase of 13 per cent over the previous year – representing £6 profit for every passenger carried.

Fares increased 2 per cent and “ancillary revenue,” particularly seat assignments and priority boarding, was up by one-sixth. The average passenger spent £51.

The year-round load factor – the proportion of capacity occupied – was 95 per cent, meaning all but nine or 10 seats were sold on the average flight.

Looking ahead, Ryanair plans to re-launch services at scale in July, despite the UK government’s plans for quarantine.

Its chief executive, Michael O’Leary, has predicted: “People will simply ignore something which is so hopelessly defective.”

The carrier has been scathing about financial aid received by other airlines, saying: “The competitive landscape in Europe will be distorted by unprecedented quantums of state aid.”

It says more than €30bn (£27bn) has been given to the Lufthansa group, Air France-KLM, Alitalia, SAS and Norwegian.

“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.”

But, the airline says: “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 has announced 3,000 job losses, mainly pilots and cabin crew, and imposed 20 per cent pay cuts.

Ryanair has been widely criticised for the delay in refunding passengers whose flights it has cancelled.

Source: Read Full Article