Ryanair staff to take 50% pay cut
Ryanair has the cash to survive for “maybe even 12 months” with no flights or revenue as the Covid-19 pandemic shuts the air travel industry down, CEO Michael O’Leary has said.
Mr O’Leary said that he and the rest of the airline’s employees will take a 50% pay cut for the months of April and May. Similar announcements were made by Aer Lingus and other airlines in recent days.
He said he was working on a best-case scenario of two to three months in which flights would be grounded and revenues would vanish, but said: “honestly none of us have any idea.”
“The priority here for us as a company is how do we preserve as much cash so that if we have to operate for three, six, nine, maybe even 12 months, with no flights and no revenues how do we survive that, do we have the cash to survive that, and we believe we do,” Mr O’Leary was quoted as saying.
Ryanair had cash and cash equivalents of over €4bn as of March 12. In addition, the group has undrawn credit lines and nearly 300 aircraft that it owns with a current value of about $8-$10bn [€7.5-9.4bn] Mr O’Leary was quoted as saying, adding that he did not expect the airline to have to draw on the credit lines for the moment.
The collapse in global passenger flights has also left airlines with the challenge of how to manage overhedged jet fuel positions as oil prices crashed to just a third of some contracts agreed in anticipation of rising prices and solid air travel demand.
Many airlines usually manage their fuel costs by locking in future prices through derivative trades known as hedges to protect against sharp price hikes. Airlines last suffered billions of dollars of losses on their fuel hedges during the 2015-2016 oil price crash.
Ryanair has 90% of its jet fuel consumption hedged in the current quarter at $667 a tonne, falling to $649 a tonne in the June quarter.
Separately, Dublin and Cork airports are scaling back passenger operations due to the fall-off in global travel.
The DAA, who operate both airports said passenger flights will continue to be facilitated. For the next month, staff will be paid their rostered hours, but will take one week’s mandatory leave or time in lieu.
