Europe’s biggest airline passenger-wise, Ryanair, has been a lot less big in its first quarter of FY21, flying 99 percent fewer passengers at just 0.5 million. The Covid-19 crisis has hit the airline hard, recording a net loss of EUR -185.1 million or -176 percent compared to last year, it announced on July 27.

For most of the April-June quarter, Ryanair was grounded. It restarted operations on June 21 and has been very active since July 1, but repatriation, rescue, and medical were all that was there to do. While traffic has picked up in Europe, Ryanair is very worried about a second wave of corona. It is unable to give guidance for the remainder of FY21 (which runs from April to April) but expects full-year traffic to fall by 60 percent to 60 million passengers compared to 148.6 million last year. It is running at 40 percent capacity and hopes to achieve 70 percent of by September. Most countries have lifted travel restrictions, except for Ireland.

Costs reduced significantly
Ryanair’s financials show an operating loss of EUR -187.6 million. Revenues were -95 percent to just EUR 125.2 million but expenses were also lower by -85 percent to 312.8 million. Fuel costs were 99 percent lower at just EUR 8.9 million but unfavorable hedging cost EUR 13 million.
“Significant work” was undertaken to reduce costs, which stand at EUR 31 per passenger. This was partly achieved through “modest” or 20-percent pay cuts agreed with cockpit and crew and unions to help “avoid widespread job losses.” Nevertheless, Ryanair has found itself in some strong battles with unions and its workforce particularly in Germany and Austria that aren’t mentioned in the release. Only last week, the airline threatened to close its Frankfurt Hahn, Weeze Niederrhein, and Berlin-Tegel bases if no agreement is reached with its pilots. On July 29, German pilots accepted the proposed 20-percent pay cut which should avert the closure.
Negotiations with staff at Malta Air are also difficult, with the closure of bases in Italy and Spain not ruled out if they fail to be succesful.

After an “heroic” (O’Leary) last-minute agreement with the Austrian union Vida, Laudamotion kept its base in Vienna open, but some 140 staff have lost their jobs. The airline has reduced its number of Airbus A320s there from 38 to 30 at lower lease rates. Without an agreement with pilots, Laudamotion will close its Stuttgart-base by the end of October. The airline hopes to operate at almost break-even in the coming months, having produced losses since its invention in 2018.
On July 28, website AeroTelegraph reports that Ryanair has created a new subsidiary on Malta: Europe. From October, Laudamotion will move all its activities from Vienna to Valletta on Malta. It has offered its Austrian staff to move with the new subsidiary.

Ryanair says it has a strong cash position, with EUR 3.9 billion in liquidity available. It has EUR 10.65 billion in unencumbered assets, including EUR 7 billion in the form of 333 Boeing 737-800s. It will seven of its oldest NGs over the coming winter, reduce costs, and repay debts within the next 24 months. The airline is negotiating with Boeing and lessors about price reduction/compensation for late deliveries plus lower lease rates.

First MAX-200s hopefully in before January
Michael O’Leary remains a strong supporter of the “game-changing” -200, which he had hoped to have in his fleet a year ago. With re-certification now likely to happen in October, he is “increasingly confident” to have his first aircraft before the end of December and some 40 before Summer 2021.

The Irish low-cost is worried about an ever more likely no-Brexit. While not UK-registered, a no-deal still will adversely affect its business but at the same time open options for Ryanair UK to operate to non-EU countries. The Group has subsidiaries with AOC’s in Ireland, Poland, Malta, and Austria. O’Leary again lashed out to his competitors that have received a combined EUR 30 billion in state aid and loans but Ryanair will make sure its cost remain the lowest. Ryanair has filed complains with the European Commission over the aid packages to Lufthansa Group and Air France-KLM, although the Commission already has approved them.

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