Ryanair misses traffic target and braces for hedging hit as lockdown kicks in

Ryanair has frozen recruitment and cut pay by 50 percent. (Shutterstock)
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Updated 04 April 2020

Ryanair misses traffic target and braces for hedging hit as lockdown kicks in

  • It reported 2020 traffic up 4 percent to 149 million passengers, but that was short of the 151 million it had expected as of March 10 and lower than its earlier target of 154 million

DUBLIN: Ryanair missed its 2020 target for passenger traffic and expects to book an exceptional charge of around €300 million ($324 million) for the financial year that ended last month, it said on Friday.

Europe’s largest budget airline said the impact of the coronavirus disease (COVID-19) meant it was not able to provide guidance for 2021. 

It reported 2020 traffic up 4 percent to 149 million passengers, but that was short of the 151 million it had expected as of March 10 and lower than its earlier target of 154 million.

Ryanair has been forced to park much of its fleet. It is currently operating fewer than 20 daily flights, or less than 1 percent of its normal schedule of more than 2,500 flights.

For 2020 it expects to report a pre-exceptional profit after tax at the lower end of €950 million to €1 billion, it said on Friday.

That is a slightly narrower range than the €950 million to €1.05 billion it gave in February.

The €300 million exceptional charge it will take for 2020 relates to the ineffectiveness of its 2021 fuel hedges.

Ryanair said it has one of the strongest balance sheets in the industry, with year-end cash equivalents of €3.8 billion and 327 aircraft, 77 percent of the group’s owned fleet, debt free.

That compared to €4 billion in Ryanair’s last update on March 16, which Goodbody analyst Mark Simpson said suggested it was burning through €100 million a week in its initial handling of the crisis as it grounded planes.

The cash-burn could be cut to around €135 million a month if the lockdown continues into the next quarter due to cost-cutting measures, Simpson said.

He also expects Ryanair to book further exceptional charges stemming from fuel hedging in the first quarter of the financial year which has just started.

Ryanair said it was grateful to many EU governments for their “foresight and speed of response in recognizing that airlines are one of the most exposed industries” but emphasised that any such support must comply with EU state aid rules.

Ryanair is scheduled to release its 2020 results on May 18.

It said it would continue to focus on delivering cost savings in the meantime.

Last month it deferred all capital expenditure and share buybacks, froze recruitment and cut pay by 50 percent.


EU pledges to stay green in virus recovery

Updated 29 May 2020

EU pledges to stay green in virus recovery

  • To help economies from the 27-nation bloc bounce back as quick as possible

BRUSSELS: The European Commission pledged on Thursday to stay away from fossil-fueled projects in its coronavirus recovery strategy, and to stick to its target of making Europe the first climate neutral continent by the middle of the century, but environmental groups said they were unimpressed.

To weather the deep recession triggered by the pandemic, Commission President Ursula von der Leyen has proposed a €1.85 trillion ($2 trillion) package consisting of a revised long-term budget and a recovery fund, with 25 percent of the funding set aside for climate action.

To help economies from the 27-nation bloc bounce back as quick as possible, the EU’s executive arm wants to increase a €7.5-billion ($8.25 billion) fund presented earlier this year that was part of an investment plan aiming at making the continent more environmentally friendly.

Under the commission’s new plan, which requires the approval of member states, the mechanism will be expanded to €40 billion ($44 billion) and is expected to generate another €150 billion in public and private investment. The money is designed to help coal-dependent countries weather the costs of moving away from fossil fuels.

Environmental group WWF acknowledged the commission’s efforts but expressed fears the money could go to “harmful activities such as fossil fuels or building new airports and motorways.”

“It can’t be used to move from coal to coal,” Frans Timmermans, the commission executive vice president in charge the European Green Deal, responded on Thursday. “It is unthinkable that support will be given to go from coal to coal. That is how we are going to approach the issue. That’s the only way you can ensure you actually do not harm.”

Timmermans conceded, however, that projects involving fossil fuels could sometimes be necessary, especially the use of natural gas to help move away from coal.

The commission also wants to dedicate an extra €15 billion ($16.5 billion) to an agricultural fund supporting rural areas in their transition toward a greener model.

Von der Leyen, who took office last year, has made the fight against climate change the priority of her term. Timmermans insisted that her goal to make Europe the world’s first carbon-neutral continent by 2050 remained unchanged, confirming that upgraded targets for the 2030 horizon would be presented by September.

Reacting to the executive arm’s recovery plans, Greenpeace lashed out at a project it described as “contradictory at best and damaging at worst,” accusing the commission of sticking to a growth-driven mentality detrimental to the environment.

“The plan includes several eye-catching green `options,’ including home renovation schemes, taxes on single-use plastic waste and the revenues of digital giants like Google and Facebook. But it does not solve the problem of existing support for gas, oil, coal, and industrial farming — some of the main drivers of a mounting climate and environmental emergency,” Greenpeace said.

“The plan also fails to set strict social or green conditions on access to funding for polluters like airlines or carmakers.”

Timmermans said the EU would keep investing in the development of emission-free public transportation, and promoting clean private transport through the EU budget.