Ryanair announces lockdown loss of £169m

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Ryanair

Budget airline Ryanair has reported a £169m loss for the first quarter of its financial year, due to the impact the COVID-19 enforced lockdown has had on the air travel industry.

The firm was forced to ground almost all its planes from mid-March to the end of June. As a result, Ryanair’s first quarter revenue fell 95% and passenger numbers fell 99% to just 500,000 people. Despite reducing costs by 85% the group made a net loss of £169m compared with a £221m profit last year.

A statement from Ryanair read: “It is impossible to predict how long the COVID-19 pandemic will persist, and a second wave of COVID-19 cases across Europe in late autumn (when the annual flu season commences) is our biggest fear right now.

“Hopefully EU governments, by implementing effective track and tracing systems, and EU citizens by complying with recommended face masks, rigorous hand hygiene and other measures, will avoid the need for further lockdowns or restrictions on intra-EU flights.”

The group began flying again in July and expects to cover 40% of its usual schedule, rising to around 60% in August and 70% in September. Ryanair expects full-year passenger numbers to fall around 60% to 60m. The group’s “biggest fear” is a second wave of COVID-19 infections in late autumn at the start of the normal flu season.

The shares fell 6.0% following the announcement.

Industry reaction

William Ryder, Equity Analyst at Hargreaves Lansdown

Ryanair’s had a tough quarter, which is to be expected when planes have been grounded. The group hopes to get a significant portion of the fleet back into the air in the next quarter, but whether this translates into a lower loss will depend heavily on passenger numbers. If we can avoid a second wave of COVID-19 infections and enough people feel sufficiently confident to go on holiday the group may be able to mitigate some losses and start to position itself for a recovery – if not things could get harder from here.

Management has taken some actions to reduce costs long term, but is worried this may not be enough to compete with airlines that received government bailouts. While this may be challenging, we think the group’s low cost base should allow it to compete effectively. Either way, what matters most is a smooth recovery in demand before next summer.

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