Ryanair posts first summer loss in decades, flags more capacity cuts

FILE PHOTO: Ryanair Boeing 737-8AS plane takes off from Riga, Latvia, March 16, 2020. REUTERS/Ints Kalnins

(Reuters) – Ireland’s Ryanair Holdings PLC (I:RYA) on Monday posted a loss for its key summer period for the first time in decades, and warned that the COVID-19 crisis could force further cuts and leave capacity next summer as little as half of normal levels.

Europe’s largest low-cost airline said COVID-19 restrictions had pushed passenger numbers down 80% in the six months ended Sept. 30, when it typically makes most of its annual profit.

Instead, it posted a loss of 197 million euros (178.2 million pounds) for the first half of its financial year, from a profit of 1.15 billion in the year-ago period. A company poll of analysts had on average forecast a loss of 244 million euros.

The airline, whose Chief Executive Michael O’Leary in September described the upcoming winter as a “write-off”, declined to forecast profit for the full financial year ending March 31, but said it expected a second-half loss greater than the first.

Ryanair reaffirmed plans to fly 38 million passengers this financial year compared with the 149 million last year, but warned that the number could fall further “if EU governments continue to mismanage air travel and impose more uncoordinated travel restrictions”.

Air traffic across Europe could be as much as 75% lower than normal this winter, O’Leary said in a pre-recorded presentation.

Ryanair is planning to fly between 50% and 80% of its normal capacity next summer, depending on how the pandemic develops, he said.

Ryanair, which has one of the airline industry’s strongest balance sheets, said it had cash on hand of 4.5 billion euros at September-end and aircraft worth about 7 billion euros.

It said its cash balance was supported by a 250 million euro supplier reimbursement from Boeing in the July-September quarter.

The airline has only posted one annual loss in the past 30 years, in 2009. It still made a small profit in the summer of that year.


Ryanair said it had yet to finalise terms with Boeing Co (N:BA) on compensation for the 18-month delay of deliveries of the grounded 737 MAX jet. It said it hoped to receive at least 30 MAX jets in time for its peak summer season next year.

Chief Financial Officer Neil Sorahan told Reuters that Ryanair was also talking with Airbus, but added that talks with Boeing were “more advanced.”

Citi analyst Mark Manduca said in a note that the results for the first half were slightly better than expected, however, the recent imposition of COVID-19 lockdowns in Europe was likely to be the key driver for Ryanair and the EU aviation sector in the near term.