Ryanair warns profits will be at lower end of guidance range

Ryanair today told shareholders that it expects to report pre-exceptional profit after tax for the year to March 31, 2020, of between €950m and €1bn.

This is at the lower end of its previously announced guidance range.

This is due to the response of EU governments to the spread of the COVID-19 virus, which have, since mid-March, included widespread flight bans and travel restrictions which have closed Europe’s skies to all but a tiny number of rescue and medical flights.

The airline is one of the biggest operators at Liverpool John Lennon (34 routes) and Manchester Airports (46 routes).

The Ryanair Group saw traffic in March fall by 48% from 10.9m guests in 2019 to 5.7m guests in 2020. This caused full-year traffic to rise just four per cent to 149m, compared with the 154m figure that Ryanair was on track to achieve, even as late as early March.

Ryanair is currently operating less than 20 daily flights, which is 99% less than its pre-COVID 19 daily schedule of more than 2,500 flights.

The airline expects its fleet to remain largely grounded for at least April and May.

It said: “We, therefore, expect to record ineffectiveness on our FY21 fuel hedges as an exceptional item in our FY20 results.

“We currently estimate that this will amount to an exceptional charge of approximately €300m.

“Ryanair Group Airlines continue to work with EU governments to maintain minimum flight links for emergency reasons, and to operate rescue and medical flights when requested to do so.

“Ryanair continues to operate occasional currency flights to ensure that its pilots and aircraft are ready for a return to service when this COVID-19 crisis passes, as it inevitably will.”

The airline said it has one of the strongest balance sheets in the industry, with year-end cash equivalents of €3.8bn and 327 (77%) of the group’s owned fleet unencumbered and debt free.

The group has already implemented a series of measures to cut operating costs, improve liquidity and cash flows.

These include aircraft groundings, deferring capex, suspending share buybacks, freezing recruitment and discretionary spending, cutting all pay (including senior management) by 50% with immediate effect for April and May, and it is engaging with its people and unions across all EU countries to agree payroll support mechanisms as they are put in place by EU governments.

Ryanair said: “We are grateful to many EU governments for their foresight and speed of response in recognising that the EU airlines are one of the most exposed industries to the COVID-19 pandemic and that our flights have been grounded by necessary government restrictions to combat the spread of COVID-19.

“However, we equally support the EU Commission’s position that any such government supports must comply with all EU State Aid and Competition rules.2

The carrier said, given the continued uncertainty on the impact and duration of the pandemic, it is not possible to give FY21 guidance at this time.

It said it will continue to focus on delivering cost savings, protecting jobs, working with EU governments to support rescue and medical flights, and preparing for the return to normal service when the COVID-19 crisis has passed, “which we hope will be sooner, rather than later”.

As this is a closed period, the group’s next market update will be on May 18, when it releases its FY20 results.