Ryanair Holdings PLC (LON:RYA) and Wizz Air Holdings PLC (LON:WIZZ) both reported a plunge in passenger numbers in March as travel bans and other fallout from the Coronavirus (COVID-19) pandemic continued to savage the travel industry.
In its traffic statistics for March, Ryanair reported it carried 0.5mln passengers in March, a 91% decline year-on-year with a load factor of 77%, while its rolling annual passenger number plummeted 81% to 27.5mln.
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Things were similarly bleak at Wizz Air, where passenger numbers fell 72.6% in March to 480,203, while its load factor sank 29.4 percentage points (ppts) to 62.5%.
On a rolling annual basis, the airline’s passenger numbers were down 74.6% at 10.2mln, while the load factor was down 29.6 ppts at 63.9%.
Despite the effects of the pandemic, Wizz continued to detail its expansion efforts, including its forty-second base in Palermo, Italy, as well as new routes from Tel Aviv to destinations in Greece, from Abu Dhabi to destinations in Kazakhstan and from Poland to five new destinations across the Mediterranean.
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However, the fortunes of the budget airlines are unlikely to improve in the coming months after the UK government unveiled plans for a ‘traffic light’ system with three tiers for international travel, while also not confirming whether travel to other countries will be able to resume on May 17 as originally outlined in its lockdown easing roadmap.
Analysts at Peel Hunt, which rates Ryanair at ‘sell’ with a target price of €12 and Wizz Air at ‘sell’ with a 3,300p target, said in a note on Tuesday the lack of clarity on international travel is “likely to restrict short-term cash flow” for the airlines, while the risk of destinations moving between the traffic light restrictions “also likely to discourage international travel and may result in overcapacity and dressed yields”.
As a result, the broker said a worse 2021 summer is “likely to result in higher net debt” for both airlines while consumer behaviour may also change permanently, posing risks to demand for business travel and migration in the long term.
Shares in Ryanair were down 1.7% at €16.51 in early deals, while Wizz Air dropped 0.5% to 4,949p.