Ryanair Holdings has reported a first half 2020 loss of €197 million, compared to a H1 2019 profit of €1.15bn. Revenue fell by 78% to €1.18bn as traffic fell 80% from 86 million a year ago to 17 million in the reporting period. Ryanair’s load factor was 72% as of the end September 2020. With almost zero Q1 traffic, the vast majority of H1 revenue was earned in Q2. Ancillary revenue performed strongly as more guests chose priority boarding and reserved seating, reports the airline.
During the period, Ryanair grounded 99% of its fleet from mid-March to end June, returning to service from July 1. Ryanair has succeeded in reducing costs across the business, with operating costs down to €1.35bn for the six months to end September 2020 from €4.5bn in the prior-year period. These figures however exclude a €214million exceptional hedge ineffectiveness charge.
Ryanair had cash of €4.5bn at the end of the reporting period, having raised €1.25bn in September by way of €400 million by an equity placing and a €850 million five-year 2.875% eurobond. Cash was also boosted by €250 million supplier reimbursements received in Q2. This action, Ryanair states, “ensures that the Group is well financed to deal with the Covid-19 crisis and removes refinancing risk as it prepares to repay maturing debt over the coming year”. The airline has more than €1.5bn debt due in 2021 (including a £600 million UK Covid Corporate Financing Facility (CCFF) in March and €850 million June 2021 bond).
Ryanair recently cut its FY21 traffic guidance to about 38 million guests. This takes the Group’s Nov-Mar capacity down from the previously guided 60% to at most 40% of prior year traffic.
Ryanair reports that it has cleared an “unprecedented volume of customer flight changes and Covid-19 cancellations, while processing a record backlog of refunds caused by almost 4 months of EU Govt imposed flight cancellations”.
Ryanair hit out at airlines that have been granted state aid for distorting the competitive environment. In its earnings release, Ryanair said that the “illegal state aid will distort competition and allow failed flag carriers to engage in below cost selling for many years” but add that the expected lull in intra-European air travel capacity for the next few years would create opportunities for Ryanair to grow its network, and expand its fleet, “to take advantage of lower cost airport and aircraft opportunities that will inevitably arise”.
Commenting on the return of the 737MAX to active service, Ryanair expects a return to service date in the fourth quarter, which would allow the airline to take delivery of its first MAX-200 in “early 2021” and will take delivery of approximately 30 MAX aircraft in 2021.
“While the Group received supplier reimbursements in Q2, compensation discussions will not be finalised or concluded with Boeing until the MAX returns to service and revised delivery schedules can be finalised and agreed. We remain committed to the Boeing 737, particularly the new 200 series “gamechanger” aircraft which have 4% more seats, 16% lower fuel burn and 40% lower noise emissions.”
Ryanair expects Brexit to have an adverse trading impact but as an EU airline group, it says it will be less effected by a no-deal scenario that UK-registered airlines.
For its FY2021, Ryanair expects a “hugely challenging year” and given the COVID-19 uncertainty, it is unable to provide any guidance but says it expects higher losses in the second half of its fiscal year than H1.
“As we look beyond the Covid-19 crisis, and the emergence of effective vaccines in early 2021, the Ryanair Group expects to have a lower cost base, a stronger balance sheet, which will enable it to fund lower fares, and add new lower cost aircraft to capitalise on the many growth opportunities that will be available in all markets across Europe, especially where competitor airlines have substantially cut capacity or failed.”