Ryanair braces itself for 'difficult year' as Michael O’Leary hits out at quarantine laws

Ryanair’s group boss Michael O’Leary.

Ryanair has further lowered the number of people it expects to carry on its planes this year and has attacked international passenger quarantine laws as it continues to burn through cash and seek some kind of return to the skies.

The airline group said its current financial year – which is less than two months old – “will be difficult” with losses likely in the first two quarters and less than 80 million passengers expected to travel over the entire 12 months. 

Just last week, Ryanair said it was eyeing 100 million passengers for its new financial year. That figure, itself, was down from an original target of 154 million people.

The group reported after-tax profits of just over €1bn for the 12 months to the end of March; up 13% on the previous year. Revenues rose 10% to €8.5bn and a passenger toll of nearly 149 million people represented 4% growth.

However, this year will be different. While the group has not given a full-year guidance, it expects to suffer a loss of over €200m in the first quarter to the end of June, and see a smaller loss in the peak summer second quarter.

Ryanair said it has a current cash balance of €4.1bn, but is still burning through €60m of cash each week; although this figure is down from €200m two months ago. That pleased investors and helped boost Ryanair’s share price by nearly 16%. The company is negotiating with unions over pay reductions and up to 3,000 job cuts as it continues to cut costs. That “right-sizing” of the business will also see Ryanair withdraw from numerous non-core airport bases across Europe.

Between July and September, Ryanair plans some return to flying, but will carry – at most – 50% of the 44.6 million passengers it had planned for the second quarter, with bookings to be impacted by public health restrictions and quarantine requirements.

Ryanair’s group boss Michael O’Leary has taken specific aim at the UK in this regard, saying the country’s government has “mismanaged” Britain’s response to the Covid-19 crisis “for many weeks” and branding its 14-day quarantine rule for in-bound travellers to the UK as “idiotic and unimplementable”.

Ryanair also said its planned return to flying will be made more competitive by the European landscape being “distorted” by state aid-backed carriers such as Lufthansa and Air France-KLM.

"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," the company said.

Ryanair also said it remains committed to Boeing’s controversial 737-Max jet, with first delivery of new orders due now in October. Ryanair said the aircraft will “transform” its cost base for the next decade.

Elsewhere, Finnish flag carrier Finnair plans to start to operate flights to its key Asian destinations in China, Japan and elsewhere from July as it starts to reopen routes. Finnair expects to lose around €2m each day this quarter as about 90% of its flights are grounded. It also plans to raise €500m through a rights issue larger than its market cap and to re-launch additional flights on its European routes in July.