A second wave of COVID-19 cases can hit airlines hard

Share

If new cases hit, this could push recovery into next year, says CEO

Stormy skies… what with COVID-19 and fresh uncertainty over Brexit, things are not exactly running smooth for UK carriers.

Dublin: Ryanair Holdings said it will continue losing money through the summer and is concerned that a second wave of coronavirus infection could push back the recovery from the pandemic into next year.

Europe’s biggest discount carrier posted a loss of 185 million euros ($217 million) in the three months through June, when its jets were idled, and expects to record a smaller shortfall the in current quarter even as flights resume, according to a statement.

“It is impossible to predict how long the COVID-19 pandemic will persist, and a second wave of cases across Europe in late autumn, when the annual flu season commences, is our biggest fear right now,” the Dublin-based company said.

There’s Brexit too

Ryanair, which restarted timetabled flights on July 1, said the crisis could create opportunities as travel remains depressed for two or three years, pushing carriers with higher costs to slash capacity. At the same time, it said the fiscal year through March 2021 will be challenging, with the further threat of “adverse trading consequences” from the UK, its biggest market, leaving the European Union without a trade deal.

The Irish company said it plans to operate about 40 per cent of its normal schedule this month, rising to 60 per cent in August and 70 per cent in September if there are no immediate setbacks, though the resumption is already under threat from Britain reinstating quarantine rules for people arriving from Spain over the weekend.

Shares of Dublin-based Ryanair have declined 25 per cent this year, the second-smallest drop in the six-member Bloomberg EMEA Airlines Index after rival discounter Wizz Air Holdings Plc.

CEO Michael O’Leary has said a fare battle may be on the cards as airlines chase market share in the wake of the Covid-19 outbreak. Ryanair could also pick up traffic as network carriers like Deutsche Lufthansa AG slim down their fleets and workforce to rein in costs.

Keep deep job cuts at bay

O’Leary has announced some of the smallest job cuts in the industry after reaching deals with unions in the UK, Austria and Ireland, with pilots and cabin crews taking temporary pay cuts over as many as four years.

Still, the CEO has railed against heftier bailout for the likes of Lufthansa and Air France-KLM, saying they’ll distort the market and allow operators to compete where they’d otherwise be unable to do so.

Ryanair, which has 135 Boeing Co. 737 Max jets on order, reiterated that it still wants to take them even after the model was grounded following two fatal crashes.

Share