Ryanair reports H1 loss of €197m as traffic falls 80% to 17 million
This week Ryanair Holdings plc reported a H1 loss of €197m, compared to a PY H1 profit of €1.15bn. Highlights of this sixmonth period include:
• 99% of the fleet grounded from mid-March to end June
• Successful return to service implemented 1 July
• H1 traffic fell from 86 million to 17 million
• Cost reduction measures implemented across business
• Successful €1.25bn financing raised in September (equity placing and eurobond)
• Cash prioritised. Closing cash €4.5bn
• Over €1.5bn debt due in 2021 (incl. £600m UK CCFF & €850m Jun’14 bond)
The impact of COVID-19
COVID-19 grounded the Group’s entire fleet from midMarch to the end of June as EU governments imposed flight or travel bans and widespread population lockdowns. During this crisis, Group airlines repatriated customers and operated rescue flights for many EU governments. The Group implemented extensive health measures, especially onboard aircraft, to comply with EU guidelines (ECDC & EASA) and on 1 July successfully resumed flights across most of our route network operating up to 60% of prior year capacity in Q2 achieving over 70% load factors.
Passenger confidence and forward bookings into W.20 were negatively impacted by the return of uncoordinated EU government flight restrictions in September and October, which heavily curtailed travel to/from much of Central Europe, the UK, Ireland, Austria, Belgium and Portugal. As a result, Ryanair recently cut its FY21 traffic guidance to approximately 38 million guests. This takes the Group’s W.20 (Nov-Mar) capacity down from the previously guided 60% to at most 40% of prior year traffic.
Ryanair’s Customer Service teams (supported by Ryanair
Labs) have cleared an unprecedented volume of customer flight changes and COVID-19 cancellations, while processing a record backlog of refunds caused by almost four months of EU government imposed flight cancellations. This process was frustrated by unlicensed OTAs, many of who provided false customer contact and fake payment details at the time of booking. Despite the enormity of the task, almost all non-OTA refund requests have now been dealt with either via cash refunds or vouchers.
The COVID-19 crisis has already caused the closure of a number of EU airlines including Flybe, Germanwings and Level as well as deep long-term capacity reductions at many others. It has sparked a flood of illegal State aid from EU governments to their flag carriers including Alitalia, Air France/KLM, LOT, Lufthansa, SAS, TAP and others. This illegal State aid will distort competition and allow failed flag carriers to engage in below cost selling for many years. We expect intra-European air travel capacity to remain subdued for the next few years. This will create opportunities for Ryanair, Europe’s lowest cost airline, to grow its network and expand its fleet, to take advantage of lower cost airport and aircraft opportunities that will inevitably arise.