Yahoo Finance Coronavirus: Ryanair won't 'request or receive' state aid as passenger numbers set to halve
Budget airline Ryanair (RYA.L) confirmed that it will not “request or receive” state aid as it is set to halve its passenger numbers over the next year.
The group said in its final results statement that for the full year for 2021, it will be difficult for Ryanair as it tries to return to scheduled flying following the COVID-19 pandemic.
“Unlike many flag carrier competitors, Ryanair will not request or receive state aid. Consultations about base closures, pay cuts of up to 20%, unpaid leave and up to 3,000 job cuts (mainly pilots and cabin crew) are under way with our people and our unions,” it said before saying it will be hard to give guidance on the full year.
However, the airline group noted in its financial statement that it raised £600m in unsecured debt in April from the UK's state-backed loan program, the Covid Corporate Financing Facility (CCFF).
Ryanair chief financial officer Neil Sorahan argued that tapping the CCFF was not comparable to the billions in state support that Air France and Lufthansa will receive. The CCCF was “not illegal state aid” as it was open to all companies with an investment grade credit rating, Sorahan said.
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The airline will also cut costs by suspending share buybacks, cutting management salaries, and deferring capital investments,
It did, however, say that it expects to record a loss of over €200m (£179m, $216m) in the first quarter, with a smaller loss expected in Q2 (peak summer).
“We’re seeing a little bit of a pickup,” said Sorahan. “There’s definitely people starting to look at kind of August/September to get some sun before the kids go back to school.”
Ryanair said it currently expects to carry less than 80 million passengers in the full year for 2021 —almost 50% below its original 154 million target. It said it will face stiff competition in the airline sector due to others receiving state aid.
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“Ryanair's return to scheduled flying will be rendered significantly more difficult by competing with flag carrier airlines who will be financing below cost selling with the benefit of over €30bn (£27bn, $32bn) in unlawful state aid, in breach of both EU state aid and competition rules,” it said in the report.
Ryanair announced last week that it aims to start ramping up to 40% of its flight schedule from 1 July, as long as government restrictions on flights within the EU are removed and “effective public health measures” are put in place at airports.
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