Ryanair aeroplanes parked at Dublin Airport in Ireland. Picture: REUTERS/JASON CAIRNDUFF
Ryanair aeroplanes parked at Dublin Airport in Ireland. Picture: REUTERS/JASON CAIRNDUFF

Dublin — Ryanair Holdings boosted its liquidity with a £600m loan backed by the UK government and said on Monday the coronavirus crisis would reduce passenger numbers by half over the next year.

Europe’s biggest low-cost carrier is tapping Britain’s Covid Corporate Financing Facility (CCFF) as it digs in for a slow recovery that’s set to see a price war across a much diminished air-travel market, it said in a statement Monday. Group operations are under review and its Austrian arm could close.

While CEO Michael O’Leary aims to resume flying in July in a bid to rescue at least some revenue this year, Ryanair said it expected  to carry fewer than 80-million passengers in the 12 months through March 2021, compared with an original target of 154-million. Bookings are edging up, but not enough to stem losses in what’s usually the peak season.

“We’re seeing a little bit of a pickup,” CFO Neil Sorahan said. “There’s definitely people starting to look at August-September out to get some sun before the kids go back to school.”

The company said it will book a loss of more than £200m for the June quarter and a smaller hit in the three months through September.

Ryanair shares were trading 4.6% higher at €8.84 in Dublin, where the group is based, paring the stock’s decline in 2020 to 40%.

The company, which counts London Stansted as its biggest base, tapped the UK’s support programme after vehemently arguing against aid for its rivals, though Sorahan said the funding doesn’t compare to billions of euros destined for Deutsche Lufthansa and Air France-KLM.

The Bank of England-administered CCFF is available to all firms with an investment grade credit rating “whether you’re a housebuilder, an airline or a boot manufacturer”, the CFO said. “It’s not illegal state aid.”

The funding lifts Ryanair’s cash balance to €4.1bn, giving it “one of the strongest cash positions in the industry”, according to Sanford Bernstein analyst Daniel Roeska, who said the company could probably withstand a shutdown beyond the end of the calendar year without a need for fresh equity.

Job cuts

O’Leary is also slashing costs by deferring capital investments, suspending share buybacks and cutting management pay, and plans to eliminate 3,000 pilot, cabin crew and office jobs, with remaining staff taking a 20% salary cut. With more than 99% of flights grounded the average weekly cash burn has dropped from €200m  in March to just over €60m.

Negotiations are under way with Boeing   about reducing planned deliveries of 737 Max jets — a model currently grounded after two crashes — over the next 24 months to reflect slower traffic, as well as with leasing firms providing Airbus A320s to the Vienna-based Lauda arm.

Ryanair reported a profit of €1bn  for fiscal 2020, before exceptional items, within its guided range of €950m to €1.05bn. The net figure was dragged down by €353m  charge against losses from jet-fuel hedges.


Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.