Ryanair Holdings plc (LON:RYA) expects to record a loss of over €200mln in the first quarter of its new financial year due to the impact of coronavirus.
The Irish budget airline predicted its loss in the peak summer second quarter will be smaller than the first, as traffic and pricing around Europe continues to be severely constrained by the pandemic, but would not extend its forecasts to the full current year.
In its full-year results statement, the group's statutory profit fell 29% to €670.3mln due to a €407mln charge for the ineffectiveness of its fuel hedge.
After cutting pay of its staff, making up to 3,000 job cuts and giving other staff unpaid leave, the average weekly cash burn has been cut from around €200m in March to just over €60m in May.
But the group expects to carry less than 80mln passengers in the year to next March, which is almost half its original target.
The carrier intends to re-start scheduled flying from July.
Chief executive Michael O’Leary continued to rage about the distortions of the competitive landscape, with significant price discounting and below-cost in Europe as a result of “unprecedented quantums of state aid (in breach of EU rules) under which over €30bn has been gifted to the Lufthansa Group, Air France-KLM, Alitalia, SAS and Norwegian among others”.
The Dublin-headquartered airline does have a current cash balance of €4.1bn of its own, however, topped up by £600mln recently raised under the Bank of England covid-19 corporate finance facility, as well as 77% of its Boeing 737s debt-free.
“As we look beyond the next year, there will be significant opportunities for Ryanair's low cost, growth model as competitors shrink, fail or are acquired by government bailed out carriers,” Ryanair said.
The shares were up 4% to €8.78 in early trading on Monday.
Without around a €40mln impact from Covid-19 in March, broker Liberum said the March 2020 profit outturn would have been at the upper end of the pre-crisis guidance range.
“It is unclear whether this cash burn rate includes capex and refunds, but it is unlikely to include maturing debt repayments,” analysts at the broker said, noting that there are discussions with Boeing and lessors to defer deliveries to better match reduced short-term growth plans.
“With losses anticipated in the seasonally stronger H1 period which normally accounts for the bulk of FY profit, a loss for the current FY seems probable,” they added.
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