Ryanair Hits Lower Than Target

Ryanair missed its target for this year’s passenger traffic. The airline hopes to book an exceptional charge of around 300 million euros for the year which ended in March.

The company said the impact of the COVID-19 meant it was unable to provide guidance for 2021. 

The largest European budget airline reported 2020 traffic up 4% to 149 million passengers. However, the numbers were short of the 151 million it had expected and lower than its earlier 154 million target.

The coronavirus pandemic has forced the airline to park much of its fleet. It now operates less than 20 daily flights, less than 1% of its normal of more than 2,500 flights. Travel restrictions across the airline industry have caused stocks to fall and stock trading to halt.

For this year the company expects to report a pre-exceptional profit after tax. It hopes for figures at the lower end of 950 million or $1.03 billion to 1 billion euros. Numbers shown are slightly at narrower range compared to the 950 million to 1.05 billion euro it gave in February.

The company will take a 300 million euro exceptional charge for 2020. This relates to the ineffectiveness on its 2021 fuel hedges.

Ryanair’s Balance Sheets

Ryanair said it has one of the strongest balance sheets in the airline industry. It has year-end cash equivalents of 3.8 billion euros and 327 airplanes, 77% of the group’s owned fleet, debt free. 

Grounding of aircrafts globally has caused sharp declines in the stock market.

Mark Simpson, Goodbody analyst, said it burnt through 100 million euros a week in handling the crisis, grounding planes.

Simpson said if the lockdown continues into the next quarter, the cash-burn could be cut to around 135 million euros. That will be per month and due to cost-cutting measures.

Moreover, Simpson also expects the airline to book further exceptional charges. This refers to charges stemming from fuel hedging in the first quarter of the financial year which has just started.

The airline said it was grateful to many EU governments. European governments recognize that airlines are one of the most exposed industries. But it emphasized that any support must comply with EU state aid rules.

Ryanair is scheduled to release its 2020 results on the 18th of May. Furthermore, it will continue to focus on delivering cost savings in the meantime.

In March 2020, the company deferred all capital expenditure and share buybacks, froze recruitment and cut pay by 50%.

Coronavirus travel bans caused stocks to dive delivering more pain to airline carriers worldwide.

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