Ryanair expects to take a €300 million charge relating to the impact of Covid-19 on its business, and has said it cannot provide any profit guidance for the year to the end of March 2021 because of uncertainty around when restrictions in various countries will be lifted.
The Irish airline said it expected to report profit after tax of between €950 million and €1 billion for the year to the end of March, at the lower end of its previous guidance in January, as it anticipates its fleet to remain largely grounded this month and next.
Ryanair’s shares traded up marginally in Dublin and London in spite of the downbeat trading statement.
The budget airline said its traffic fell in March by 48 per cent to 5.7 million passengers as a result of the response of EU governments to the spread of Covid-19, which has included widespread flight bans and travel restrictions.
Full-year traffic for the airline is, therefore, up just 4 per cent to 149 million passengers, lower than the 154 million passengers the airline had hoped to achieve.
Ryanair now operates fewer than 20 daily flights, a figure that is 99 per cent lower that its pre-Covid-19 schedule of more than 2,500 flights a day. It expects its fleet to remain largely grounded for “at least April and May”.
As a result of the grounding Ryanair estimates it will have to take an exceptional charge of about €300 million because of the ineffectiveness of its fuel hedging for this year.
“Ryanair has one of the strongest balance sheets in the industry, with year-end cash equivalents of €3.8 billion and 327 (77 per cent) of the group’s owned fleet unencumbered and debt free,” the airline said in a stock exchange update on Friday.
Groundings
It said it had already implemented several measures to cut operating costs and improve liquidity and cash flows.
“These include aircraft groundings, deferring capex, suspending share buybacks, freezing recruitment and discretionary spending, cutting all pay [including senior management] by 50 per cent with immediate effect for April and May, and we are engaging with our people and our unions across all EU countries to agree payroll support mechanisms as they are put in place by EU governments.”
The company, which also controls airlines such as Lauda and Buzz, will next update the market on May 18th, when it releases its full-year results.
“We are grateful to many EU governments for their foresight and speed of response in recognising that the EU airlines are one of the most exposed industries to the Covid-19 pandemic,” Ryanair said, adding that it supports the European Commission’s position that government supports must comply with EU state aid rules.
“The Ryanair group of airlines will continue to focus on delivering cost savings, protecting jobs, working with EU governments to support rescue and medical flights, and preparing for the return to normal service when the Covid-19 crisis has passed,” it said.
