Ryanair cut its annual passenger target by another 20% on Monday May 18 and said that it has no idea how much it will earn this year, but its shares surged 8% on strong cost control and a €1 billion profit in the past financial year.
The low-cost carrier said that it expects to fly less than 80 million passengers in the coming year, down from a target of 100 million given last week and an original target of 154 million.
Chief executive Michael O'Leary, who plans to operate a skeleton fleet until the June and approximately half of its normal capacity in July and August, told Sky News that bookings by holiday-makers are "building nicely".
But he said that the airline's performance is dependent on measures taken by governments, including what he described as the "idiotic" mismanagement of the COVID-19 crisis by the United Kingdom. "It is idiotic and it is unimplementable," O’Leary told BBC radio, referring to UK plans to impose a 14-day quarantine on international travellers.
"For the next 12 months it's obviously impossible for us today to give you any guidance on either traffic numbers or on profits," O'Leary said in a video presentation after the full-year results.
"We have no idea because it is entirely subject to passenger numbers, yields and the lifting of government restrictions."
Ryanair's shares jumped 8% to €9.12 after it announced a profit of €1 billion for the year to March 31, having lost only five million of 150 million passengers to COVID-19 restrictions. Ryanair's share price is down approximately 40% since the start of the crisis.
Investors were impressed by Ryanair's announcement that it has cut its weekly cash burn to a little more than €60 million in May from approximately €200 million in March and that it has a cash balance of €4.1 billion, said Stephen Furlong, transport analyst at Dublin-based brokerage Davy.
"It looks like things are somewhat under control," Furlong said.
Cost Cuts
As part of a cost-cutting drive that will cut at least 3,250 jobs, Ryanair is looking at pulling out of some airports across Europe.
O'Leary said that the airline will first look at the possible closure of loss-making bases in the UK, Germany and Spain, but that it could widen that to Italy, Belgium, and central and eastern Europe if necessary.
It is also likely to close the main base of its Lauda subsidiary in Austria, which O'Leary said is facing an "existential crisis" because of the COVID-19 pandemic.
"We need pay cuts. We need job losses, we need lower airport costs if we are going to right-size the business and right-size the cost base," O'Leary said.
Ryanair expects to post a loss of a little more than €200 million in the three months to the end of June and either break even or post a small loss for July to September, O'Leary said.
He admitted to having "no visibility" on customer behaviour, but said that he expects demand to return pretty quickly thanks to deep discounting.
Pre-crisis ticket price levels will not return until 2022 or later, O'Leary said.
The airline said last week that it expects a surge in bookings in the coming weeks from people who have been cooped up at home for months.
News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.
