Ryanair has posted the biggest annual loss in the company’s 35-year history, after Covid travel restrictions and national lockdowns nearly wiped out traffic last year.
The airline swung to an €815m (£701m) loss in the 12 months to 31 March, compared with a €1bn profit a year earlier, after passenger numbers plunged 81% in what it said was its “most challenging” year to date.
But the airline struck a hopeful note, suggesting the vaccine rollout would help the company recover from an unprecedented year of disruption for the aviation industry. Ryanair said it could break even this year, in the absence of further disruption.
Europe’s largest discount airline said passenger numbers dropped to 27.5 million last year from 149 million in the year before. It blamed the poor figures on European governments it claimed imposed uncoordinated flight bans, travel restrictions and national lockdowns with little notice during the outbreak.
Ryanair expects traffic to recover as governments begin to lift international travel restrictions, with forecasts for around 80 million to 120 million passengers during the current financial year. It expects to fly just 5 million to 6 million passengers between April and June.
While the airline expects European air travel to be “materially lower” for the foreseeable future, it forecasts a “strong recovery in air travel, jobs and tourism” in the second half of the year.
“Unless there are some very adverse developments, either a fallover in vaccine delivery or some variant that looks like it’s resistant to the vaccine, all of the indications are that there’s going to be stronger demand than usual for European holidays,” said Ryanair’s chief executive, Michael O’Leary.
The comments came as the UK reopened for foreign travel on Monday, with the government scrapping legal restrictions on going abroad.
While travellers will no longer have to give a permitted reason to fly internationally, those returning to England will need to follow a traffic light system that will require them to isolate at home or in a hotel depending on which country they have visited.
O’Leary said UK travellers had been booking flights to destinations beyond the green list, including Spain and the Balearic Islands, for June, July and August, proving passengers were “discounting short-term restrictions”.
He also played down fears over a new variant first discovered in India, noting that the UK health secretary, Matt Hancock, was confident that current vaccines were effective against the disease.
Ryanair said airfares were lower than normal at this time of year due to the continued lag in bookings. “But I’m very happy with a yield penalty in the short term, while we repair our volumes,” O’Leary said.
While passengers made 500,000 bookings in the first week of April, that number grew to 1.5m in the second week of May, with bookings up 50% over the past weekend alone. Ryanair hoped to return to pre-Covid traffic levels in 2022-23.
The airline will take advantage of the recovery by raising more money on the bond market in the coming days, but aims to slash debt levels after the pandemic. “The objective of the group in the next year or two will be to repair the balance sheet,” O’Leary said, adding that he wants to get back to a “zero net debt position in the next two to three years”.
“So anybody looking for share buybacks or dividends will have to wait,” he added.
He also took aim at the plane manufacturer Boeing, after deliveries of the 737 Max were again delayed in April. The airline has been waiting nearly two years for the aircraft after fatal crashes grounded the new models. The airline confirmed it had received an undisclosed sum in compensation.
“We think the management of Boeing in Seattle has been very complacent,” O’Leary said, claiming the manufacturer had failed to properly manage the relationship with regulators.